In the Dynamic Aggregate Demand and Aggregate Supply Model, the Rate

question 101

Multiple Choice

In the dynamic aggregate demand and aggregate supply model, the rate of inflation will increase if:

• A)AD shifts faster than AS.
• B)AD shifts slower than AS.
• C)AS shifts faster than AD.
• D)the price level rises.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.

Product Cost

The total expense involved in creating a product, including direct materials, direct labor, and manufacturing overhead.

Variable Cost

Expenses that vary directly with the amount of output or the scale of operations.

Product Costs

The costs directly associated with the production of goods or services, including raw materials, labor, and manufacturing overhead.