In the Graph Shown, a Shift in the AD Curve

question 27

Multiple Choice

In the graph shown, a shift in the AD curve to the right:

• A)raises domestic consumption.
• B)lowers domestic consumption.
• C)lowers globally constrained potential output.
• D)causes goods inflation.

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Definitions:

Opportunity Costs

The cost of opting for one choice over another, representing the benefits missed out on when choosing one alternative over another.

Taxes

Compulsory financial charges or levies imposed by a government on individuals, corporations, and transactions to fund public expenditures.

Capital Investment

Funds invested in a business or project with the expectation of generating income or profit over the long term.

Sunk Costs

Expenses that have already been incurred and cannot be recovered or refunded.