Using the AD-AS Model, If Consumers and Business Become More

question 83

Multiple Choice

Using the AD-AS model, if consumers and business become more optimistic about the future direction of the economy and increase spending, then:

• A) aggregate demand will decrease.
• B) aggregate demand will increase.
• C) long-run aggregate supply will increase.
• D) long-run aggregate supply will decrease.

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Definitions:

Variable Manufacturing Costs

Costs that vary directly with the level of production, such as raw materials and labor expenses.

Variable Manufacturing Costs

Costs that vary directly with the level of production output, such as raw materials and direct labor.

Book Value

The net value of an asset or a company, calculated by subtracting its total liabilities from its total assets.