Which of the Following Would Cause a Positive Aggregate Demand

question 63

Multiple Choice

Which of the following would cause a positive aggregate demand shock, but leave the aggregate supply curve unaffected?

• A)A medical report confirming that improved health for Canadian workers caused fewer lost days of production.
• B)A substantial increase in world oil prices.
• C)A severe drought lasting for six months that destroys agricultural and forestry production.
• D)An improvement in the computer literacy of workers.
• E)A free trade agreement between Canada and the United States that leads Canadian businesses to increase investment expenditures.

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Definitions:

Cost of Debt

The cost of debt is the effective interest rate a company pays on its debts, including loans and bonds, accounting for tax benefits.

Equity Financed

Refers to raising capital for a company through the sale of shares in the company to investors.

Tax Rate

The portion of one's income or a company's earnings attributed to taxes.

Current Rate

The present value of a financial instrument or the latest interest rate on a loan or investment.