A Decrease in the Price Level

question 43

Multiple Choice

A decrease in the price level

• A) decreases investment spending,thereby shifting the AD curve.
• B) increases investment spending,thereby shifting the AD curve.
• C) does not shift the AD curve.
• D) increases autonomous consumption spending,thereby shifting the AD curve.
• E) changes the slope of the AD curve.

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Definitions:

Expand Output

The process of increasing the quantity of goods or services produced by a business or economy.

Marginal Cost

The additional cost incurred by producing one more unit of a good or service, a critical concept for decision-making in production and pricing.

Marginal Revenue

The extra income a business earns by selling an additional unit of a product or service.

Profit-maximizing Firm

A business entity that aims to achieve the highest possible profit through its operations and decision-making, focusing on optimizing revenue and minimizing costs.