Because Increases in the Price Level Reduce Planned Aggregate Expenditure

question 130

Multiple Choice

Because increases in the price level reduce planned aggregate expenditure and short-run equilibrium output,

• A) the short-run aggregate supply line is horizontal.
• B) the short-run aggregate supply line is downward-sloping.
• C) the aggregate demand curve is horizontal.
• D) the aggregate demand curve is downward-sloping.
• E) the aggregate demand curve is upward-sloping.

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Definitions:

Treasury Stock

Shares of a company's own stock that it has reacquired from shareholders but not retired, held as an asset on the balance sheet.

Premium

The amount by which the price of a financial instrument or asset exceeds its par or face value; also refers to the cost paid for an insurance policy.

Owners' Equity

The residual interest in the assets of a business after deducting liabilities, representing the ownership stake.

Noncurrent Liabilities

Long-term financial obligations listed on a company's balance sheet that are not due for settlement within one year.