If Consumption Changes Because of a Change in the Price

question 169

Multiple Choice

If consumption changes because of a change in the price level,then the

• A) economy moves from one point on an AD curve to another point on the same curve.
• B) AD curve shifts.
• C) economy moves from one point on a SRAS curve to another point on the same curve.
• D) SRAS curve shifts.
• E) none of the above

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Definitions:

Option Contract

A contract which grants the holder the right to buy or sell an underlying asset at a predetermined price within a specified time frame.

Hedge Risk

A financial strategy used to limit or offset the probability of loss from fluctuations in the prices of currencies, commodities, or securities.

Speculate

The act of investing or trading in financial assets with high risk in anticipation of significant returns.

American Option

A type of options contract that allows holders to exercise the option at any time up to and including the expiration date.