When an Increase in Aggregate Demand Exceeds the Increase in Aggregate

question 170

Multiple Choice

When an increase in aggregate demand exceeds the increase in aggregate supply,

• A) real GDP decreases while nominal GDP increases.
• B) the economy will experience inflation as the price level rises.
• C) the price level falls while real GDP increases.
• D) nominal GDP decreases and real GDP decreases.

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Definitions:

Inventory

The raw materials, work-in-progress, and finished goods that a company holds for the purpose of sale in the future.

November

The 11th month in the Gregorian calendar system.

Cash Collections

The process of gathering and processing payments received from customers, especially in terms of accounts receivable management.

Cash Disbursements

Payments made by a business in the form of cash or cash equivalents.