The Aggregate Demand Curve

question 63

Multiple Choice

The aggregate demand curve

• A) is a horizontal line if the economy is perfectly competitive
• B) depicts the economy's equilibrium output level at each possible price level
• C) depicts the economy's equilibrium output at each possible interest rate
• D) shifts whenever the price level changes
• E) can slope upward if the Fed changes the money supply

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Definitions:

Short-Run Equilibrium

The state in which the quantity supplied equals the quantity demanded within a short time frame, often with some factors held constant.

Economic Loss

The monetary value of the decrease in welfare or trade-offs resulting from an economic transaction or decision, beyond just the physical loss.

Product Differentiation

The strategy of setting a product or service apart from others in the industry to enhance its attractiveness to a specific target group.

Allocative Efficiency

A condition of distributing resources in which improving the situation of one person necessitates the detriment of another.