What Sequence of Events Results from an Increase in Aggregate

question 265

Multiple Choice

What sequence of events results from an increase in aggregate demand?

• A) The price level falls, inventories decline, firms respond by increasing output and employment.
• B) The price level falls, inventories increase, firms respond by reducing output and employment.
• C) The price level rises, inventories decline, firms respond by increasing output and employment.
• D) The price level rises, inventories increase, firms respond by increasing output and employment.

Recognize the role of human capital investment in the development process of newly industrialized economies.

Comprehend the economic and social indicators reflecting stages of development among countries.

Identify strategies for developing countries to close the developmental gap with developed countries.

Understand trends and shifts in foreign aid strategies towards private and non-governmental channels.

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Definitions:

Price Controls

Government-imposed limits on the prices that can be charged for goods and services in the market.

Misallocation

The inefficient or inappropriate distribution of resources in a manner that does not maximize economic efficiency or output.

Production Cost

The total expense incurred in the manufacture of a product, including raw materials, labor, and overhead costs.

Black Market

Illegal trade of goods and services, beyond government control, where transactions typically occur “under the table” to avoid taxes or regulations.