Suppose the Aggregate Demand Curve Is Given by Y =

question 36

Multiple Choice

Suppose the aggregate demand curve is given by Y = 12 - r then, if inflation increases by 1 percent ________.

• A) aggregate output is unchanged
• B) aggregate output increases
• C) the nominal interest changes
• D) the real interest rate falls

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Definitions:

Idle Cash

Idle cash refers to funds that are not currently invested, earning interest, or being used in operations, often representing missed opportunities.

Treasury Bills

Short-term government securities with maturities ranging from a few days to 52 weeks, often considered risk-free investments.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable, and inventories.

DSO

Days Sales Outstanding, a financial metric that measures the average number of days that a company takes to collect payment after making a sale.