Within the AD/AS Model, an Increase in Capital Formation That

question 178

Multiple Choice

Within the AD/AS model, an increase in capital formation that permits the economy to achieve a larger output will

• A) increase long-run aggregate supply.
• B) increase short-run aggregate supply, but long-run aggregate supply will be unaffected.
• C) increase aggregate demand.
• D) decrease aggregate demand.

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Definitions:

Income

The financial return or earnings, including wages, salaries, benefits, and investment returns, received by an individual or household over a period of time.

Nuts

Edible seeds encased in a hard shell, often consumed as a snack or used as an ingredient in various dishes.

Berries

Fruits that are characterized by their soft texture and seed-containing interior; commonly consumed fresh or in various culinary preparations.

Utility Function

A mathematical representation of how different bundles of goods or services are ranked in terms of their utility or satisfaction to a consumer.