The Effect of a Positive Demand Shock Is to

question 106

Multiple Choice

The effect of a positive demand shock is to

• A)decrease the level of aggregate demand.
• B)cause prices to rise.
• C)decrease the firm's cost of producing at every level of output.
• D)decrease the level of employment.

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Definitions:

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Employment

The condition of having paid work, or the relationship between an employer and an employee where the employee provides labor in exchange for compensation.

Positive Economics

The branch of economics that focuses on describing and explaining economic phenomena as it actually exists.

Automobile Emissions

The gases and particles that are released into the atmosphere by vehicles powered by internal combustion engines, contributing to air pollution.