Suppose That an Increase in Aggregate Demand Causes an Unplanned

question 55

Multiple Choice

Suppose that an increase in aggregate demand causes an unplanned depletion in business inventories.Which of the following situations will result from this?

• A)The economy moves up the short-run Phillips curve.
• B)The short-run Phillips curve shifts to the right.
• C)The short-run Phillips curve shifts to the left.
• D)The aggregate supply curve shifts to the left.
• E)The economy moves down the short-run Phillips curve.

---

Definitions:

Substitute Goods

Products or services that can be used in place of one another, fulfilling the same needs or wants of the consumer.

Normal Goods

Goods for which demand increases as the income of the consumer increases, exhibiting a direct relationship between income and demand.

Complementary Goods

Goods that are typically consumed together, such that the demand for one increases when the price of the other decreases.

Substitute Goods

Goods that can be used in place of each other, where an increase in the price of one leads to an increase in demand for the other.