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.

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Definitions:

Loan Collateral

Security that a borrower offers a lender to secure a loan.

Uncollected Accounts

Accounts receivable that have not yet been paid by customers, representing outstanding debts owed to a business.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to meet short-term obligations.

Long-Term Financing

Funding obtained for a time period exceeding one year, used for acquiring or investing in long-duration assets.