Aggregate Demand Is the Total Value of Real GDP That

question 110

Multiple Choice

Aggregate demand is the total value of real GDP that

• A) all sectors of the economy are willing to purchase at various average price levels, all other things unchanged.
• B) all sectors of the economy are willing to sell at various average price levels, all other things unchanged.
• C) consumers are willing to purchase at various average price levels, all other things unchanged.
• D) consumers are willing to purchase at various national income levels, all other things unchanged.

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Definitions:

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating profitability beyond normal returns.

Long-run

A period of time in which all factors of production and costs are variable, allowing companies to adjust to market changes completely.

Perfectly Competitive

Describes a market structure where many firms offer identical products, there are no barriers to entry or exit, and all firms are price takers, meaning they accept the market price as given.

Perfectly Competitive

A market structure characterized by an infinite number of small firms, homogeneous products, and easy entry and exit, leading to price-taking behavior.