If an Aggregate Demand Curve Is Drawn with Real GDP

question 78

Multiple Choice

If an aggregate demand curve is drawn with real GDP (Y) along the horizontal axis and the price level (P) along the vertical axis, using the quantity theory of money as a theory of aggregate demand, this curve slopes ______ to the right and gets ______ as it moves farther to the right.

• A) downward; steeper
• B) downward; flatter
• C) upward; steeper
• D) upward; flatter

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Definitions:

AVC

Average Variable Cost, the cost per unit of varying the level of output, exclusive of fixed costs.

TVC

Total Variable Costs, which refers to all variable expenses associated with the production of goods or services.

Formula

A mathematical relation or rule expressed in symbols.

Average Total Cost

The total cost divided by the number of units produced, representing the cost per unit.