Refer to the Diagram Below

question 111

Multiple Choice

Refer to the diagram below.Suppose that aggregate demand increased from AD₁to AD₂.For the price level to stay constant:

• A) the aggregate supply curve would have to shift rightward.
• B) the aggregate supply curve would have to shift leftward.
• C) real domestic output would have to remain constant.
• D) the aggregate supply curve would have to be vertical.

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Definitions:

Colas

Cost-of-living adjustments (COLAs) are automatic adjustments made to salaries, wages, or benefits to counteract the effects of inflation.

Marginal Utility

The increase in happiness or usefulness experienced by a consumer when one more unit of a good or service is consumed.

Good A

A placeholder term that typically represents a general or unspecified item in economic models or discussions.

Good B

A term representing a specific product or service under consideration in an economic model or market analysis.