In the Aggregate Demand and Supply Model

question 89

Multiple Choice

In the aggregate demand and supply model:

• A) the aggregate supply curve is horizontal at full-employment real GDP.
• B) the vertical axis measures real GDP.
• C) the horizontal axis measures the average price level.
• D) equilibrium occurs where the AD and AS intersect.

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Definitions:

Transaction Costs

The expenses incurred when buying or selling securities, including broker fees and taxes.

Futures Markets

Competitive marketplaces where parties can trade standardized futures contracts; that is, legal agreements to buy or sell something at a predetermined price at a specified time in the future.

Leverage

The use of borrowed funds or financial instruments to increase the potential return of an investment, which can also magnify the potential for loss.