If Aggregate Demand Decreases, the

question 95

Multiple Choice

If aggregate demand decreases, the

• A) short-run Phillips curve shifts rightward.
• B) short-run Phillips curve shifts leftward.
• C) economy moves to a higher inflation rate along its short-run Phillips curve.
• D) economy moves to a lower inflation rate along its short-run Phillips curve.
• E) short-run Phillips curve does not shift nor is there a movement along it.

---

Definitions:

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate the relative value of company shares.

Market Price

The current price at which an asset or service can be bought or sold.

Net Income

The sum a company retains as earnings after deducting taxes and expenses from its total revenue.

Profit Margin Ratio

A financial metric that measures the extent to which a company or business activity makes money, expressed as a percentage of revenue.