An Increase in the Price Level Will Cause

question 132

Multiple Choice

An increase in the price level will cause

• A)an increase in the quantity of aggregate output supplied
• B)a decrease in the quantity of aggregate output supplied
• C)a leftward shift of the aggregate supply curve
• D)a rightward shift of the aggregate supply curve
• E)a leftward or rightward shift of the aggregate supply curve,depending on the reason for the price change

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Definitions:

Accounts Receivable

Money owed to a business by its clients for goods or services that have been delivered but not yet paid for.

Incremental Cash Flows

Incremental cash flows are the additional operating cash flows that an organization receives from taking on a new project, used to analyze the profitability of that project.

Capital Investment

Funds invested in a firm or enterprise for the purpose of furthering its business objectives.

Stand-Alone Principle

Evaluation of a project based on the project’s incremental cash flows.