Use the Following to Answer Questions

question 298

Multiple Choice

Use the following to answer questions:
Figure: An Increase in Aggregate Demand
-(Figure: An Increase in Aggregate Demand) Refer to Figure: An Increase in Aggregate Demand. Because of the pressures at the short-run equilibrium at Y₂ and P₂:

• A) the SRAS will shift to the right.
• B) the SRAS curve will shift to the left.
• C) unemployment will decrease.
• D) LRAS will shift to the right.

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Definitions:

Mixed Cost

Expenses that have both fixed and variable components, changing with the level of activity but not directly proportional.

Variable Costs

are expenses that change in proportion to the activity of a business, such as the cost of raw materials used in production.

Differential Costs

The difference in total cost that will result from selecting one alternative over another.

Fixed Costs

Fixed costs include payments like rent, salaries, and insurance that are unaffected by variations in production or sales volumes.