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.

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Definitions:

Economic Analysis

A methodical strategy for deciding the best way to allocate limited resources, which includes evaluating multiple options to reach a particular goal within established assumptions and limitations.

Marginal Changes

Marginal changes describe small adjustments to a variable's quantity or level, analyzing the effects of these adjustments on an overall system.

Status Quo

The existing state or condition of affairs, often used in the context of maintaining current circumstances without change.

Entrepreneurship

The act of creating, organizing, and running a new business venture to take advantage of market opportunities, often involving risk and innovation.