A Leftward Shift of the Aggregate Demand (AD)curve Could Result

question 27

Multiple Choice

A leftward shift of the aggregate demand (AD) curve could result from a fall in

• A)autonomous government purchases.
• B)induced imports.
• C)the price level.
• D)autonomous desired saving.
• E)the net tax rate.

Interpret the difference between purchase and rental prices of capital in terms of marginal product.

Understand the concept of marginal productivity and its importance in determining firm labor demand.

Analyze the influence of changes in market conditions (such as wages and product prices) on firm's profit-maximizing employment level.

Grasp the impact of technology on production efficiency and labor demand.

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Definitions:

Wage Rate

The standard amount of compensation paid to an employee per unit of time for their labor or services.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a factor, such as labor, keeping other factors constant.

Resource

An asset or input that is utilized in the production of goods and services, such as labor, capital, and raw materials.

Units

Basic quantities or measurements used to express a variable or to quantify the elements in an analysis.