When an Increase in Aggregate Demand Exceeds the Increase in Aggregate

question 49

Multiple Choice

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

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

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Definitions:

Gain Recognition

The process of recording increases in asset value, typically when assets are sold for more than their book value.

Consolidated Income Statement

A financial statement that combines the income, expenses, and profits of a parent company and its subsidiaries to present the overall performance.

Subsidiary Sold Land

An event where a company owned by another company sells a piece of real estate.

Consolidated Sales

The total sales revenue of a parent company and its subsidiaries, reported as one figure in the consolidated financial statements.