If Prices Are Fixed, an Increase in Aggregate Expenditures Results

question 426

Multiple Choice

If prices are fixed, an increase in aggregate expenditures results in an increase in equilibrium GDP that

• A) is greater than the change in aggregate expenditure.
• B) is equal to the change in aggregate expenditure.
• C) is less than the change in aggregate expenditure.
• D) has no necessary relationship to the size of the change in aggregate expenditure.

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Definitions:

Expected Interest Rate

The forecasted cost of borrowing money or the rate at which investment returns are anticipated to grow over a specific period.

Semiannual Interest

Interest that is calculated and paid twice a year, often used in bond markets to denote the interest payments made to bondholders.

Ask Price

The lowest price a seller is willing to accept for a security in the financial markets.

Invoice Price

The price that appears on the invoice from the manufacturer to the dealer, often not reflecting the actual price a consumer pays.