A Rise in the Price Level

question 38

Multiple Choice

A rise in the price level

• A) decreases the quantity of real GDP demanded.
• B) decreases aggregate demand.
• C) has no effect on aggregate demand or on the quantity of real GDP demanded.
• D) increases aggregate demand.
• E) increases the quantity of real GDP demanded.

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Definitions:

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to be reinvested in its core business or to pay debt.

Source of Capital

Various origins from which businesses or individuals can obtain funds, including equity, debt, and internal generation.

Administrative Expenses

Overhead or general expenses related to the day-to-day running of a business, not directly tied to production.

Market Prices

The prevailing price for goods or services in a competitive marketplace, determined by supply and demand.