If There Is an Unanticipated Increase in Aggregate Demand, Then

question 100

Multiple Choice

If there is an unanticipated increase in aggregate demand, then according to new classical economics, the economy will self-correct with a(n)

• A) decrease in short-run aggregate supply, so output returns to its initial level but the price level rises.
• B) decrease in short-run aggregate supply, so output increases and the price level rises.
• C) decrease in short-run aggregate supply, so output returns to its initial level and the price level falls.
• D) increase in short-run aggregate supply, so output increases and the price level rises.

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Definitions:

Inventory Account

An account that tracks the value of a company's inventory, including raw materials, work-in-process, and finished goods.

Perpetual Inventory System

An accounting method where inventory records are updated continuously as transactions occur.

Inventory Shrinkage

The loss of products due to factors like theft, damage, or error, which leads to a discrepancy between recorded inventory and actual stock.

Lost Or Stolen Goods

This term refers to inventory items that are missing due to theft or misplacement and represent a loss to the business.