Consider the AD/AS Model

question 60

Multiple Choice

Consider the AD/AS model. Suppose there is an increase in autonomous desired consumption at a given price level. The result is

• A)the AE curve shifts upward and the AD curve shifts to the right.
• B)the AE curve shifts downward and the AD curve shifts to the right.
• C)no change in either the AE or the AD curve.
• D)the AE curve shifts upward and the AD curve shifts to the left.
• E)the AE curve shifts downward and the AD curve shifts to the left.

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Definitions:

Management by Exception

A management strategy where managers only intervene in decision making when performance deviates significantly from standards, allowing more focus on important issues.

Controllable

Refers to costs or elements within a business that can be directly managed, influenced, or altered by decisions of management.

Noncontrollable

Refers to expenses or influences that cannot be altered or changed by the management due to external constraints or fixed contract terms.

Flexible Budget

A budget that adjusts or varies with changes in the volume or activity level of a company.