The Relationship Between the Aggregate Demand Curve and the Aggregate

question 51

Multiple Choice

The relationship between the aggregate demand curve and the aggregate expenditures model is shown in the fact that:

• A)a decrease in the price level shifts the aggregate expenditures schedule downward and decreases real GDP.
• B)a decrease in the price level shifts the aggregate expenditures schedule upward and increases real GDP.
• C)an increase in the price level shifts the aggregate expenditures schedule upward and increases real GDP.
• D)an increase in the price level shifts the aggregate expenditures schedule downward and increases real GDP.

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Definitions:

Natural Monopoly

A market structure where a single supplier is most efficient in producing or providing goods or services due to high fixed or startup costs, making competition less viable.

Long-Run Average Total Cost

The average cost per unit of output over the long term, where all inputs are variable and economies of scale have been utilized.

LRATC

Long Run Average Total Cost, which represents the per-unit cost of production when all factors of production are variable, and scale of production can be adjusted.

Diseconomies of Scale

occur when a company or business grows so large that the costs per unit increase, causing efficiency to decrease.