Consider the AD/AS Model

question 5

Multiple Choice

Consider the AD/AS model.Suppose there is a decrease in aggregate demand and,simultaneously,an increase in aggregate supply.The result will be a

• A)rise in real GDP but price level changes will be indeterminate.
• B)rise in real GDP and a rise in the price level.
• C)rise in real GDP and a fall in the price level.
• D)an indeterminate change in real GDP and a rise in the price level.
• E)an indeterminate change in real GDP and a fall in the price level.

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Definitions:

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating the company's financial performance.

Retained Earnings

The part of net profits that is not distributed as dividends but is kept by the company for reinvestment in its primary business or for debt repayment.

Dividends Declared

Profits distributed by a company to its shareholders, usually determined by the company's board of directors.

Statement of Retained Earnings

A financial document showing how a company's retained earnings have changed over a period due to dividends and earnings.