The Aggregate Demand Curve Slopes Downward Indicating That

question 145

Multiple Choice

The aggregate demand curve slopes downward indicating that

• A)an increase in the general price level will reduce the aggregate quantity of goods and services demanded.
• B)an increase in the general price level will increase the aggregate quantity of goods and services demanded.
• C)a change in the interest rate will alter the aggregate quantity of goods and services demanded.
• D)consumers substitute between domestic-made and foreign-made goods as their relative prices change.

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Definitions:

Profit-maximizing

The process or goal of adjusting the production and sale of goods or services to achieve the highest possible profit.

Quantity Discounts

Price reductions given to buyers purchasing large quantities, intended to encourage bulk buying.

Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and products that are similar, leading to prices being determined by supply and demand.

Marginal Cost

The cost incurred by producing one additional unit of a good or service.