Exhibit 10-8 Aggregate Demand and Supply in Exhibit 10-8

question 104

Multiple Choice

Exhibit 10-8 Aggregate demand and supply In Exhibit 10-8, if aggregate demand shifts from AD₅ to AD₄, real GDP will:

• A)not change, and the price level will fall from 170 to 100.
• B)not change, and the price level will fall from 140 to 100.
• C)fall from $8.0 to $6.0, and the price level will not change.
• D)fall from $8.0 to $6.0, and the price level will fall from 140 to 120.
• E)not change, and the price level will fall from 170 to 140.

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Definitions:

Historical Cost

An accounting principle requiring assets to be recorded at their original purchase price, without adjusting for increases or decreases in value.