A Decrease in Aggregate Demand in the Economy Will Have

question 148

Multiple Choice

A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

• A)The price level will fall,and the level of GDP will be unaffected.
• B)The price level will fall,and the level of GDP will fall.
• C)The price level will rise,and the level of GDP will fall.
• D)The price level will rise,and the level of GDP will be unaffected.

---

Definitions:

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good varies with the quantity of the good produced.

Average Total Cost (ATC)

The total cost of production divided by the quantity of output produced, representing the per-unit production cost.

Total Variable Cost

The sum of those costs that rise as output increases. Examples of variable costs are wages paid to workers and payments for raw materials.

Output

The total amount of goods or services produced by a company, sector, or economy during a specific period.