What Happens to the Price Level and Real Output During

question 46

Multiple Choice

What happens to the price level and real output during the self-correction process after a fall in aggregate demand?

• A)The price level increases and real output decreases.
• B)The price level decreases and real output decreases.
• C)The price level decreases and real output increases.
• D)The price level increases and real output increases.

---

Definitions:

EBIT

EBIT, or Earnings Before Interest and Taxes, represents a company's profit figure that does not take into account expenses stemming from interest and income taxes.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, typically presented in the income statement.

Financial Leverage

Utilizing borrowed funds to enhance the possible yield from an investment.

Long-Term Solvency

A measure of a company's ability to meet its long-term financial obligations and commitments, indicating financial stability over the long term.