An Increase in Expected Future Income Will

question 9

Multiple Choice

An increase in expected future income will:

• A) Increase aggregate demand and aggregate supply
• B) Decrease aggregate demand and aggregate supply
• C) Increase aggregate supply
• D) Increase aggregate demand

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Definitions:

Step-Wise Variable Cost

A cost that remains fixed within a certain level of activity but will jump to a higher amount at a certain point due to increased activity.

Variable Costs

Costs that change in proportion to the level of activity or production volume.

Cost-Volume-Profit Analysis

An accounting method used to determine the effects of changes in costs and volume on a company's profits.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behavior are valid.