Assume the Aggregate Demand Curve Intersects the Aggregate Supply Curve

question 74

Multiple Choice

Assume the aggregate demand curve intersects the aggregate supply curve in its intermediate range.A decrease in the aggregate supply curve will

• A)increase the price level and decrease real GDP.
• B)decrease the price level and increase real GDP.
• C)increase both the price level and real GDP.
• D)decrease both the price level and real GDP.

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Definitions:

FIFO Cost Flow

An inventory valuation method where the first items purchased are the first ones to be sold, assuming costs rise over time.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to the beginning inventory and subtracting the cost of goods sold.

Laptop Computers

Portable personal computers designed for mobile use, characterized by a screen and a keyboard.

Average Cost Method

A method of inventory valuation that calculates the cost of goods sold and ending inventory based on the average cost of all items available for sale during a period.