-If Aggregate Demand Shifts from AD2 to AD4

question 220

Multiple Choice

-If aggregate demand shifts from AD2 to AD4,

• A)both output and the price level will rise.
• B)output will rise and the price level will fall.
• C)output will rise and the price level will remain the same.
• D)both output and the price level will fall.
• E)output will fall and the price level will rise.

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Definitions:

Period Cost

Expenditures that are not directly tied to the production process and are expensed in the period in which they are incurred.

Product Cost

The total expense incurred to produce and make ready for sale a product, including direct materials, labor, and overhead costs.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision.

Total Expected Cost

A projection of the total costs associated with a project or business activity, including both fixed and variable costs.