On a Graph That Shows the Derivation of the AD

question 51

Multiple Choice

On a graph that shows the derivation of the AD curve,an exogenous change in the price level causes

• A)a shift in the AE curve and a movement along the AD curve.
• B)a shift in both the AE and AD curves.
• C)a movement along the AE curve and a shift in the AD curve.
• D)a movement along the AE curve but not along the AD curve.
• E)a movement along both the AE and AD curves.

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Definitions:

Leading Economic Indicators

Variables that predict, or lead to, a recession or recovery; examples include consumer confidence, stock market prices, business investment, and big-ticket purchases, such as automobiles and homes.

Business Cycle

The natural fluctuation of the economy between periods of expansion (growth) and contraction (recession).

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often measured by a price index.

Risk-Free Rate

The rate of return on an investment with no risk of financial loss, typically represented by the yield on government bonds.