Refer to the Above Diagram

question 189

Multiple Choice

Refer to the above diagram.If the price level rises above P₁ because of an increase in aggregate demand,the:

• A) economy will move up along curve B and output will temporarily increase.
• B) long-run aggregate supply curve C will shift upward.
• C) short-run aggregate supply curve B will automatically shift to the right.
• D) economy's output first will decline,then increase,and finally return to Q₁.

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Definitions:

Net Sales

The amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and discounts.

Gross Profit

The financial metric representing the difference between revenue and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

Inventory Value

The total cost or market value of all the goods and products held by a company intended for sale.

Replacement Cost

The current cost of replacing an asset with another of similar kind and same utility without considering depreciation.