Starting from Long-Run Equilibrium, an Increase in Aggregate Demand Will

question 10

Multiple Choice

Starting from long-run equilibrium, an increase in aggregate demand will cause

• A)a decrease in production in the short run.
• B)an increase in employment in the short run.
• C)a decrease in the price level.
• D)downward pressure on wage rate.

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Definitions:

Compounded Semiannually

Interest that is computed and appended to the original amount semi-annually.

Effective Rate

The actual interest rate that an individual earns or pays on an investment, loan, or other financial product, after compounding and other factors are taken into account.

Car Loan

A financial loan specifically used to purchase a car, typically secured by the car itself as collateral.

Periodic Rate

The interest rate applied to a financial loan or savings account that is compounded at regular intervals over a period of time.