If There Is an Unanticipated Increase in Aggregate Demand, Which

question 185

Multiple Choice

If there is an unanticipated increase in aggregate demand, which of the following is most likely to occur?

• A) a reduction in the price level
• B) an increase in the rate of unemployment
• C) an increase in employment
• D) an expansion in the federal budget deficit

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Definitions:

Variable Costs

Outlays that shift in tandem with the quantity of goods produced.

Long Run

A period sufficient for all inputs and production processes to be adjusted, including changing the scale of production facilities.

Average Fixed Costs

Average Fixed Costs are the total fixed costs of production divided by the quantity of output produced.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output in the short run, such as rent or salaries.