If the Aggregate Demand Curve Shifts to the Right, the Long-Run

question 157

Multiple Choice

If the aggregate demand curve shifts to the right, the long-run equilibrium will occur at a _______ price level and _______ level of output.

• A) higher; higher
• B) higher; lower
• C) higher; the same
• D) lower; higher

---

Definitions:

Cost-Volume-Profit Chart

A graphical representation that shows the relationship between a company's costs, sales volume, and profits.

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, a measure of how revenue growth translates into growth in operating income.

Variable Costing

A managerial accounting method that includes only variable production costs (materials, labor, and overhead) in product costs, treating fixed manufacturing overhead as an expense of the period.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.