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.

---

Definitions:

Insufficient Funds

A situation where an account does not have enough money to cover withdrawals or transactions, often leading to fees or declined transactions.

Credit Memo

A document issued by a seller to a buyer, reducing the amount the buyer owes to the seller under the terms of an existing invoice, often due to a return or a rebate.

Bank Reconciliation

The process of matching and comparing the account balance according to the bank statement with the balance recorded in the company’s own accounting records to identify discrepancies.

Risk Assessment

The process of identifying, analyzing, and evaluating the levels of risk facing an entity, project, or investment.