Which of the Following Does the Downward Slope of the Aggregate

question 142

Multiple Choice

Which of the following does the downward slope of the aggregate demand curve show?

• A)that an increase in the money supply causes the aggregate quantity of goods and services demanded to increase
• B)that an increase in the money supply causes the aggregate quantity of goods and services demanded to decrease
• C)that an increase in the price level causes the aggregate quantity of goods and services demanded to increase
• D)that an increase in the price level causes the aggregate quantity of goods and services demanded to decrease

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Definitions:

Profit Maximization

A company's objective to make the most amount of profit possible with its current resources and market conditions.

Competitive Firm

A company that operates in a market with many buyers and sellers, where each has a negligible effect on the market price.

Average Total Cost

The cost per unit of output, calculated by dividing the total production cost by the quantity of output produced.

Marginal Revenue

The supplementary earnings acquired from selling an extra unit of a product or service.