If Aggregate Demand Shifts Inward Over a Long Period of Time

question 128

Multiple Choice

If aggregate demand shifts inward over a long period of time, with aggregate supply held constant, the economy should experience

• A)unemployment.
• B)budget surpluses.
• C)stagflation.
• D)inflation.

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Definitions:

Monopoly Power

The exclusive ability of a company to determine the price and production level of a product or service in the market.

Marginal Revenue

The gain in revenue resulting from the sale of one extra unit of a good or service.

Marginal Cost

The price of making an additional unit of a product or service.

Perfect Competition

A market setup where numerous buyers and sellers interact, offering identical products, with no barriers to entry or exit, and complete transparency of information, resulting in suppliers having no control over prices.