An Increase in the Price Level Results in a

question 32

Multiple Choice

An increase in the price level results in a

• A)downward shift in the AD curve and a movement down along the AE curve.
• B)leftward movement along both the AE and AD curves.
• C)downward shift in the AE curve and a movement up along the AD curve.
• D)downward shift in both the AE and AD curves.

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Definitions:

Return on Sales

A financial ratio that calculates a company's net income relative to its revenue, showing how efficiently it converts sales into profits.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate sales revenue.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health of a company.

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.