An Increase in the Price Level in the Aggregate Expenditures

question 122

Multiple Choice

An increase in the price level in the aggregate expenditures model would

• A) decrease aggregate expenditures and shift the AD curve to the left.
• B) increase aggregate expenditures and shift the AD curve to the right.
• C) decrease aggregate expenditures but would not shift the AD curve.
• D) increase aggregate expenditures but would not shift the AD curve.

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Definitions:

Profit-Maximizing Price

The price at which a firm can sell its product to maximize its profit, determined by various factors including demand, cost of production, and market competition.

Oligopolist's MC Curve

The marginal cost curve for a firm in an oligopoly, illustrating the cost of producing an additional unit of output, which can influence pricing and output decisions in a market with few competitors.

Total Revenue

The total amount of money generated by a business from the sale of its products or services before any costs or expenses are subtracted.

Collude

The act of cooperating or conspiring, especially in secret, between firms to limit competition and increase market profit at the expense of consumers.