Figure 91 Shows Three Aggregate Demand Curves

question 25

Multiple Choice

Figure 9.1 shows three aggregate demand curves. A movement from curve AD1 to curve AD2 could be caused by a(n)

• A) decrease in the money supply.
• B) increase in taxes.
• C) decrease in the price level.
• D) increase in government spending.

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Definitions:

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is accounted for initially at cost and adjusted thereafter for the post-acquisition change in the investor's share of the investee's net assets.

Joint Venture Investment

A joint venture investment is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task or business activity.

Acquisition Differential

The difference between the purchase price of an acquired company and the fair value of its identifiable tangible and intangible assets.

Retained Earnings

The portion of net earnings not distributed as dividends but retained by the company to be reinvested in its core business or to pay debt.