If Society Wants Aggregate Demand to Increase Without Changes in the Price

question 77

Multiple Choice

If society wants aggregate demand to increase without changes in the price level,then there must be

• A)a gap between full employment and the current level of real national income and an increase in autonomous spending.
• B)an increase in autonomous spending combined with an increase in the marginal propensity to save.
• C)an increase in autonomous saving so that autonomous investment spending can increase.
• D)an increase in autonomous spending and a horizontal short-run aggregate supply curve.

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Definitions:

Market Risk Premium

The additional return expected by investors for holding a risky market portfolio instead of risk-free assets.

Beta Risk

Beta risk measures the volatility of an investment in relation to the market as a whole, indicating how much an asset's price is expected to fluctuate relative to overall market movements.

Risk Adjustment

Risk adjustment is the process of modifying estimates or decisions to account for the risk involved, often used in financial, insurance, and healthcare sectors.

Capital Structure

Refers to the mix of debt and equity financing a company uses to fund its operations and growth.