In the Classical Model, a Change in Aggregate Demand

question 314

Multiple Choice

In the classical model, a change in aggregate demand

• A) causes a change in long-run real GDP but not in the price level.
• B) causes a change in the price level but not in the long-run real GDP.
• C) causes changes in both the long-run real GDP and in the price level.
• D) has no effect on either real GDP or the price level.

---

Definitions:

Operating Expenses

The costs associated with running a day-to-day business operation, excluding the cost of goods sold.

Residual Income

The income that remains after all personal debts and expenses have been paid, or in business, the net income after deducting cost of capital from operating profit.

Investment Center

A business segment within a company for which the manager has control and responsibility over cost, revenue, and investments.

Target Income

The specific amount of net income that a company aims to achieve for a certain period.