Given the Shift of the Aggregate Demand Curve from AD₁

question 7

Multiple Choice

Given the shift of the aggregate demand curve from AD₁ to AD₂ in Exhibit 6, the real GDP and price level (CPI) in long-run equilibrium will be:

• A)$10 billion and 200.
• B)$4 billion and 150.
• C)$10 billion and 150.
• D)$10 billion and 100.

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Definitions:

Average Fixed Costs

The total fixed costs divided by the number of units produced, representing the fixed cost per unit of output.

Marginal Cost

The cost of producing one additional unit of a product or service.

Total Cost

The sum of all costs incurred by a business in producing goods or services, including both fixed and variable costs.

AVC

An alternative term for Average Variable Cost, reflecting the variable costs incurred per unit of output.