Which of the Following Would Likely Cause a Downward Parallel

question 97

Multiple Choice

Which of the following would likely cause a downward parallel shift in the AE curve and a leftward shift in the AD curve?

• A)an increase in the business confidence of firms
• B)a reduction in government purchases
• C)an decrease in the MPC
• D)a decrease in the price level
• E)an increase in the price level

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Definitions:

Natural Monopoly

A market condition where the most efficient number of firms in the industry is one, due to the high infrastructure or fixed costs associated with distribution networks.

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting the value they place on it.

Income

The extraction of financial value, repetitively over time, from working engagements or investment pursuits.

Income Elasticity

A measure of how much the demand for a good or service changes with a change in the consumer's income.