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:

Purchase Returns

Goods returned by the buyer to the seller due to defects, excess supply, or other reasons.

Sales Discount

A reduction in the price of goods or services offered to customers, typically to prompt early payment or bulk purchases.

Contra Revenue Account

An account used to record reductions in gross revenue, such as discounts, returns, and allowances.