An Increase in Aggregate Demand When the Economy Is Operating

question 192

Multiple Choice

An increase in aggregate demand when the economy is operating at full capacity is likely to result in

• A) an increase in both output and the overall price level.
• B) an increase in output but no increase in the overall price level.
• C) an increase in the overall price level but no increase in output.
• D) no increase in either output or the overall price level.

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Definitions:

Collectively Exhaustive

A condition where all possible outcomes or cases are considered together, covering every eventuality.

Probability

A measure of the likelihood of a given event occurring, often expressed as a number between 0 and 1.

Mutually Exclusive

Events or propositions that cannot both be true or occur at the same time, implying the occurrence of one event excludes the occurrence of the other.

P(A)

The probability of event A occurring.