In the Long Run, an Increase in Aggregate Demand from a Position

question 98

Multiple Choice

In the long run, an increase in aggregate demand from a position of full employment leads to:

• A) higher prices and higher output.
• B) higher prices and the same output.
• C) higher output and lower prices.
• D) higher output and higher unemployment.

---

Definitions:

Treasury Bill Rate

The Treasury bill rate is the yield or return on investment for U.S. government debt securities known as Treasury bills, which have short-term maturities.

Cost of Equity

The return a company needs to generate to compensate its equity investors, often calculated using models like the Capital Asset Pricing Model (CAPM).

Financing

The process of providing or obtaining funds for business activities, making purchases, or investing.

Initial Cost

The original expenditure for purchasing an asset or starting a project, excluding maintenance or operating costs.