According to the AS-AD Model

question 3

Multiple Choice

According to the AS-AD model,

• A)the aggregate quantity supplied is typically greater than the aggregate quantity demanded,thereby leading to unemployment.
• B)the equilibrium is where the AS curve crosses the AD curve,but the amount of real GDP at this point is not always equal to potential GDP.
• C)the aggregate quantity demanded is typically greater than the aggregate quantity supplied,thereby leading to inflation.
• D)the AS curve is always equal to potential GDP.
• E)changes in the amount of potential GDP is the only factor that shifts both the aggregate supply curve and the aggregate demand curve.

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Definitions:

Total Revenue

The total amount of money a company receives from its sales of goods or services, calculated by multiplying the price per unit by the number of units sold.

Demand Elastic

Referring to a situation where the quantity demanded of a good or service significantly changes in response to a change in its price.

Price-Elasticity Coefficient

A numeric value that measures how much the quantity demanded of a good responds to a change in the price of that good, indicative of its price sensitivity.

Price Reduction

A decrease in the selling price of goods or services, often intended to stimulate demand or respond to competitive market pressures.