Economic Environments That Have Higher Levels of Planned Aggregate Expenditure

question 16

Multiple Choice

Economic environments that have higher levels of planned aggregate expenditure for a given level of output have:

• A) PAE curves that are higher on the expenditure diagram.
• B) PAE curves that reflect higher levels of interest rates.
• C) higher levels of imports.
• D) higher levels of inventory.

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Definitions:

Total Fixed Costs

Expenses that do not change with the level of output or production in the short term, such as rent, salaries, and insurance.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output within a given period.

Marginal Product of Labor

The additional output a firm gains by employing one more unit of labor, holding other inputs constant.

Variable Input

An input whose quantity can be changed in the short run to increase or decrease production.