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

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Definitions:

Expected Value

The weighted average of all possible values of a random variable, with weights being their respective probabilities.

Probability

A measure quantifying the likelihood of a specific event occurring, often expressed as a number between 0 and 1.

Von Neumann-Morgenstern Utility Function

A utility function that assumes individuals can rank their preferences under uncertainty, used in expected utility theory to describe choices.

Insurance

A financial product that provides protection against financial loss or harm, in exchange for the payment of a premium.