An Increase in the Price Level Shifts the AE Curve

question 24

Multiple Choice

An increase in the price level shifts the AE curve

• A) upward and shifts the AD curve leftward.
• B) upward and shifts the AD curve rightward.
• C) downward and does not shift the AD curve.
• D) downward and shifts the AD curve leftward.
• E) downward and shifts the AD curve rightward.

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Definitions:

Creative Destruction

The process through which new innovations lead to the demise of older technologies or industries, driving economic growth through continuous evolution.

Dominant Firms

Companies that hold a major portion of market share in their industry, influencing market conditions.

New Products

Items that have been recently introduced to the market, offering new features, benefits, or technological advancements.

Marginal Cost

The cost added by producing one additional unit of a product or service, essential for understanding profitability and production efficiency.