In the Long Run, an Increase in Aggregate Demand Causes

question 9

Multiple Choice

In the long run, an increase in aggregate demand causes the price level to ____ and the long-run aggregate supply curve to ____.

• A) decrease; decrease
• B) increase; increase
• C) decrease; remain unchanged
• D) increase; remain unchanged

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Definitions:

Nominal Interest Rate

The stated interest rate of a bond or loan, not adjusted for inflation, representing the actual annual cost of borrowing.

Compounded Quarterly

The process where interest is calculated and added to the principal sum of an investment or loan on a quarterly basis.

Lifetime Subscription

A one-time payment plan for a product or service that grants the subscriber access for the lifetime of the product or service.

Annually

Occurring once every year.