Consider a Simple Macro Model with a Given Price Level

question 42

Multiple Choice

Consider a simple macro model with a given price level and demand-determined output.An exogenous change in the price level causes a

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

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Definitions:

Cost of Goods Sold

The costs incurred directly from the production of goods a company offers for sale, which include material and labor expenses.

Direct Expenses

Direct expenses are costs that can be directly traced to a specific cost object, such as a product, department, or project.

Departmental Contribution Margin

The difference between sales revenue and variable costs for a specific department, indicating its contribution to the overall profit.

Contribution Margin

The amount remaining from sales revenue after variable costs are subtracted, indicating how much contributes towards covering fixed costs and generating profit.