When the Aggregate Demand Curve Shifts

question 2

Multiple Choice

When the aggregate demand curve shifts,

• A) the inflation rate does not change.
• B) there is a change in the natural unemployment rate.
• C) there is a movement along the short-run Phillips curve.
• D) there is a change in potential GDP.
• E) the short-run Phillips curve shifts.

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Definitions:

Economic Profit

The difference between total revenue and the sum of explicit and implicit costs.

Marginal Revenue

Marginal Revenue is the additional income received from selling one more unit of a good or service.

Market Price

The present cost at which a service or asset is available for purchase or sale in a specific market.

Profit

The financial gain realized when the amount of revenue gained exceeds the expenses, costs, and taxes involved in sustaining the activity.