A Fall in the Price Level Shifts the AE Curve

question 224

Multiple Choice

A fall in the price level shifts the AE curve ________ and ________ equilibrium expenditure.

• A) upward; increases
• B) upward; decreases
• C) downward; increases
• D) downward; decreases

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Definitions:

Interest Rate

The segment of a loan levied as interest upon the borrower, customarily indicated as an annual proportion of the loan yet to be repaid.

Utility Function

A representation in economics that expresses the preference ordering of various utility levels or consumption bundles by individuals or firms.

Consumption

The use of goods and services by households or individuals, often analyzed to understand economic activity and consumer behavior.

Bushels

A bushel is a unit of volume that is used in the United States for measuring quantities of agricultural produce such as grains, fruits, and vegetables.