If Factor Prices Remain Constant, an Increase in Aggregate Demand

question 56

Multiple Choice

If factor prices remain constant, an increase in aggregate demand

• A)increases the price level and increases real GDP.
• B)increases the price level and decreases real GDP.
• C)decreases the price level and increases real GDP.
• D)decreases the price level and decreases real GDP.
• E)increases the price level, and leaves real GDP unchanged.

---

Definitions:

Salvage Value

The estimated resale value of an asset at the end of its useful life, often used in depreciation calculations.

Scrap Value

The anticipated value of an asset when it reaches the end of its functional lifespan, commonly utilized in figuring out depreciation.

Units-Of-Activity Method

A method of depreciation that provides for depreciation expense based on each unit of activity of a fixed asset.

Depreciable Cost

The total cost of a tangible asset minus its estimated salvage value, representing the amount subject to depreciation over the asset's useful life.