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:

Dividends Declared

Dividends declared are the portion of a company's earnings that the board of directors decides to distribute to shareholders.

Shareholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities, essentially the net worth attributable to shareholders.

Liabilities

Financial obligations or debts that a company owes to external parties or creditors.

Cash Dividend

A cash dividend is a payment made by a company out of its earnings to shareholders in the form of cash.