An Increase in the Price Level in an Economy Will

question 98

Multiple Choice

An increase in the price level in an economy will _____.

• A)shift the aggregate expenditure line upward
• B)shift the aggregate expenditure line downward
• C)cause an upward movement along the aggregate expenditure line
• D)cause a downward movement along the aggregate expenditure line
• E)shift the aggregate demand curve downward

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Definitions:

Socially Optimal

A state in which resources are allocated in the most efficient way from a societal perspective, maximizing overall welfare or social utility.

Output Quantity

The amount of goods or services produced by a company or sector during a specific period.

Social Planner

An idealized figure in economic theory responsible for designing economic policies or interventions to achieve optimal allocation of resources and welfare in a society.

Social Cost

The total cost to society, including both private costs incurred by producers and external costs to other parties not involved in the transaction.