Refer to the Following Figure to Answer the Next

question 82

Multiple Choice

Refer to the following figure to answer the next questions.

-Based on the figure, which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?

• A) The economy has been producing more than its full-employment output level and wages and input prices begin to rise.
• B) There is an increase in the price of oil.
• C) There is an increase in the general price level that reduces real wealth.
• D) There is a reduction in consumer confidence about future growth in the economy.
• E) There is a reduction in income tax rates.

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Definitions:

Residual Income

The amount of income that an individual has after all personal debts and expenses have been paid.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit of the investment by its cost.

Residual Income

The net income that exceeds the minimum required return on a company's investments or operations.

Minimum Return on Investment

The least amount of return that an investor is willing to accept for an investment, considering the risk and opportunity cost.