Shifts in the Aggregate-Demand Curve Can Cause Fluctuations in

question 4

Multiple Choice

Shifts in the aggregate-demand curve can cause fluctuations in

• A)neither the level of output nor the level of prices.
• B)the level of output,but not in the level of prices.
• C)the level of prices,but not in the level of output.
• D)the level of output and in the level of prices.

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Definitions:

Trade Credit Terms

Trade credit terms are the conditions agreed upon between a buyer and seller regarding the payment for goods or services, including the repayment period and any discounts for early payment.

Discount

The reduction in the price of goods or services, usually offered to prompt sales or because the product is damaged, outdated, or in less demand.

Restricted Policy

A policy under which holdings of cash, securities, inventories, and receivables are minimized.

Relaxed Policy

A policy under which relatively large amounts of cash, marketable securities, and inventories are carried and under which sales are stimulated by a liberal credit policy, resulting in a high level of receivables.