Figure 14.2

question 2

Multiple Choice

Figure 14.2
-Using Figure 14.2,a shift in aggregate demand from AD₄ to AD₅ will cause,ceteris paribus:

• A) An increase in real output and an increase in the price level.
• B) An increase in real output but no change in the price level.
• C) An increase in the price level but no change in real output.
• D) A decrease in the price level but no change in real output.

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Definitions:

Effective Rate

The effective rate is the actual interest rate on an investment or loan, taking into account the compounding of interest, as opposed to the nominal or stated rate.

Compounding Interval

The frequency at which interest is added to the principal of a deposit or loan, influencing the total interest earned or paid.

Compounded Quarterly

The process of calculating interest on both the initial principal and the accumulated interest over three-month intervals.

Interest Rate

The percentage at which interest is calculated on the principal of a loan or deposit over a specific period of time.