Exhibit 14A-1 Aggregate Demand and Supply Model

question 21

Multiple Choice

Exhibit 14A-1 Aggregate demand and supply model

Beginning in Exhibit 14A-1 from long-run equilibrium at point E₁, the aggregate demand curve shifts to AD₂ . The economy's path to a new long-run equilibrium is represented by a movement from:

• A) E ₃ to E ₁ to E ₂ .
• B) E ₁ to E ₃ to E ₂ .
• C) E ₂ to E ₁ to E ₂ .
• D) E ₁ to E ₂ to E ₃ .

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Definitions:

Owner's Equity Account

An account on a company's balance sheet representing the owner's total interest in the business, after subtracting liabilities from assets.

Transaction

An agreement or communication carried out between two or more parties that results in the exchange of goods, services, or money.

Credits

Credits refer to a bookkeeping entry that increases a liability or equity account, or reduces an asset or expense account, reflecting the opposite side of a debit.

Assets

Assets are resources owned or controlled by a business, expected to bring future economic benefits.