If the AD Curve Shifts Rightward While the AS Curve

question 54

Multiple Choice

If the AD curve shifts rightward while the AS curve and potential GDP don't change, then

• A) there will be no change in real GDP, so the economy is at the peak of the cycle.
• B) there will be no change in real GDP, so the economy is at the trough of the cycle.
• C) the economy will move from a peak into a recession.
• D) the expansion phase of the business cycle occurs.
• E) real GDP does not change.

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Definitions:

Portfolio Standard Deviation

A measure of the dispersion of returns from a portfolio, indicating the portfolio's risk.

Cyclical Stock

Shares of companies whose earnings and stock price are heavily influenced by the ups and downs of the economy at large.

Countercyclical Stock

A type of stock whose performance is inversely related to the overall state of the economy; it tends to perform well during economic downturns.

Expected Return

Expected Return is the anticipated amount of profit or loss an investment is likely to generate, accounting for both the risk of the investment and the time value of money.