Which of the Following Events Shifts Aggregate Demand Rightward

question 116

Multiple Choice

Which of the following events shifts aggregate demand rightward?

• A)an increase in government expenditures or a decrease in the price level
• B)a decrease in government expenditures or an increase in the price level
• C)an increase in government expenditures,but not a change in the price level
• D)a decrease in the price level,but not an increase in government expenditures

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Definitions:

Cross Elasticity

Cross elasticity of demand quantifies how the demand for a good or service is affected by the price change of another related good, reflecting their substitutability or complementarity.

Complements

Goods or services that are used together, where the use of one increases the demand for the other.

Substitutes

Goods or services that can be used in place of each other; as the price of one increases, the demand for the other increases.

Price Inelastic

Describes a situation where the demand for a product does not significantly change with a change in its price.