The Aggregate Demand (AD)curve Presented in the Textbook Has Its

question 60

Multiple Choice

The aggregate demand (AD) curve presented in the textbook has its particular shape because of which of the following explanations?

• A)an increase in the money supply (M)will cause a reduction in the interest rate,an increase in investment,and an increase in output .
• B)an increase in the aggregate price level (P)will cause an increase in the interest rate and a reduction in output.
• C)an increase in P will cause a reduction in the real wage,an increase in employment,and an increase in output.
• D)as P decreases in a closed economy,goods and services become relatively cheaper and individuals respond by increasing the quantity demanded of goods and services.

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Definitions:

Additional Paid-In Capital

Represents the amount of money shareholders have invested in a company above the nominal value of the shares.

Exercise

A physical or mental activity performed for the purpose of maintaining health and fitness or a procedure undertaken to achieve a skill through practice.

Non-Interest-Bearing Note

A promissory note or loan agreement that does not accrue interest over its duration.

Present Value

The contemporary valuation of a sum of money to be received in the future or ongoing cash flows, using a specific return rate.