If There Is an Increase in Aggregate Demand While Aggregate

question 43

Multiple Choice

If there is an increase in aggregate demand while aggregate supply is perfectly inelastic, then:

• A) the inflation rate increases.
• B) the equilibrium GDP decreases.
• C) the quality of life in the economy improves.
• D) the purchasing power of money increases.

---

Definitions:

Accounts Payable

A liability account on the balance sheet representing money owed by a company to its creditors or suppliers for purchases made on credit.

Credit Column

The section of an accounting record where increases in liabilities, revenues, and equity accounts are recorded.

Debit Column

The Debit Column is the left-hand side of an account record in double-entry bookkeeping, used to record increases in asset, expense, and loss accounts, and decreases in liability, equity, and revenue accounts.

General Journal

A primary accounting record used to document all financial transactions in chronological order.