-In the Figure Above,the Shift in the Aggregate Demand Curve

question 64

Multiple Choice

-In the figure above,the shift in the aggregate demand curve from AD1 to AD3 could be the result of

• A)a decrease in the real interest rate.
• B)a decrease in the buying power of money.
• C)an increased expectation of a recession that lowers the expected rate of profit from investment.
• D)a decrease in the foreign exchange rate.
• E)an increase in the price level.

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Definitions:

AVC Curve

The graphical representation of the Average Variable Cost of production as it relates to output levels.

Short Run

A time period in economics during which at least one input, such as plant size, is fixed and cannot be changed.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced; it decreases as production increases.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.