An Increase in Aggregate Demand Causes an Increase in

question 187

Multiple Choice

An increase in aggregate demand causes an increase in

• A) income, which in turn induces an increase in consumption.
• B) investment, which in turn induces an increase in consumption.
• C) government, which in turn induces an increase in net exports.
• D) consumption, which in turn induces an increase in price.

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Definitions:

Risk-Free Asset

A financial instrument that is considered to have no risk of financial loss and typically features a guaranteed rate of return, such as government bonds.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, showing how much each value in the set differs from the mean.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, commonly used in statistics to quantify the degree to which values differ from the average value.

Budget Line

An illustration showing all the different pairs of two items that a buyer can afford, considering their financial resources and the pricing of such goods.