When Deriving the Aggregate Demand (AD) Curve from the Aggregate

question 202

Multiple Choice

When deriving the aggregate demand (AD) curve from the aggregate expenditure model, an increase in Canadian product prices would cause:

• A)an increase in the value of household wealth and reduced consumption expenditures.
• B)an increase in interest rates and lower investment expenditures.
• C)an increase in exports and imports.
• D)an increase in Canadian resource prices and an increase in aggregate supply.

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Definitions:

Uncertainty

The state of being unsure about the outcome of an event or the veracity of a fact.

Indifferent

A state of neutrality or lack of preference between two or more choices or outcomes.

Alternatives

Different options or choices available to replace or serve as substitutes for something else.

High Demand

A market condition where the desire and readiness of consumers to purchase a product significantly exceeds the supply, often leading to increased prices.