-If Aggregate Demand Shifts from AD4 to AD5

question 196

Multiple Choice

-If aggregate demand shifts from AD4 to AD5,

• A)output will rise and the price level will fall.
• B)output will fall and the price level will rise.
• C)neither output nor the price level will change.
• D)the price level will rise and output will remain unchangeD.
• E)output will rise and the price level will remain unchanged.

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Definitions:

Real GDP

Represents the value of all final goods and services produced within a country's borders in a specific time period, adjusted for inflation.

Percentage Change

A calculation that indicates how much something increases or decreases in value, expressed as a ratio of the initial value to the difference in value, times 100.

GDP Deflator

The GDP deflator is an economic metric that converts the current prices of all goods and services produced in an economy to constant prices, allowing for inflation adjusted comparisons.

Real GDP

The calculation of a nation's economic production taking into account adjustments for variations in prices and inflation, revealing the actual value of goods and services generated.