An Increase in Aggregate Expenditures Resulting from Some Factor Other

question 132

Multiple Choice

An increase in aggregate expenditures resulting from some factor other than a change in the price level is equivalent to

• A)a rightward shift of the aggregate demand curve in the AD-AS model.
• B)a leftward shift of the aggregate demand curve in the AD-AS model.
• C)a movement downward along a fixed aggregate demand curve in the AD-AS model.
• D)a decrease in aggregate supply in the AD-AS model.

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Definitions:

Discount Rates

Interest rates used to calculate the present value of future cash flows.

Cash Constraints

Financial limitations that restrict the ability to purchase or invest due to the unavailability of liquid assets or cash.

Opportunity Costs

The cost of foregone alternatives when one option is chosen over another, representing the benefits that could have been received by taking the alternate action.

Expected NPV

Net Present Value expected from an investment, taking into account the probability of various outcomes.