Consider the AD/AS Model

question 29

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)an indeterminate change in real GDP and a fall in the price level.
• C)an indeterminate change in real GDP and a rise in the price level.
• D)rise in real GDP and a fall in the price level.
• E)rise in real GDP and a rise in the price level.

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Definitions:

Credit Sales

refers to sales in which the buyer is permitted to pay at a later date, commonly used in business to business transactions.

Specific Customers

Refers to the particular group or segment of customers targeted by a business for its products or services.

Annual Interest Rate

The percentage increase in the amount of money owed as interest on a loan or investment, calculated on an annual basis.

Principal

The original sum of money borrowed in a loan, or the amount of the investment, excluding any interest or dividends.