Reference: Ref 23-3 (Figure: Budget Constraint) Refer to the Figure

question 20

Multiple Choice

Reference: Ref 23-3 (Figure: Budget Constraint) Refer to the figure. If the price of sneakers rises, then the budget constraint in the figure will:

• A) not change.
• B) become steeper.
• C) become flatter.
• D) shift to the left.

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Definitions:

Aggregate Demand

The total demand for goods and services within a particular market or economy at current price levels.

Price Level

The price level is an index that measures the average prices of goods and services in an economy over a period of time.

Real GDP

measures the value of all goods and services produced by an economy in a specific period, adjusted for inflation.

Government Expenditures

The total amount of money the government spends, including spending on goods, services, and transfer payments.