-In the Figure Above, as the Price Level Increases, the Aggregate

question 49

Multiple Choice

-In the figure above, as the price level increases, the aggregate demand curve will

• A) shift from AD₁ to AD3 and then back to AD₁.
• B) not shift, but the aggregate demand curve will change so that it is positively sloped.
• C) not shift.
• D) shift from AD₁ to AD3.
• E) shift from AD₁ to AD₂.

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Definitions:

Cross-Price Elasticity

The responsiveness level of the quantity of a product needed when there's a fluctuation in the price of another product.

Cross-Price Elasticity

An assessment of how changes in the price of one good affect the demand for another good.

Complements

Goods that are often used together, where an increase in the demand for one leads to an increase in the demand for the other.

Cross-Price Elasticity

A measure of how the quantity demanded of one good changes in response to a price change of another good.