Exhibit 8-3 -Refer to Exhibit 8-3.A Shift in Aggregate Demand from AD₁

question 18

Multiple Choice

Exhibit 8-3
-Refer to Exhibit 8-3.A shift in aggregate demand from AD₁ to AD₂ would have been the result of

• A) a decrease in the price level.
• B) an increase in the price level.
• C) an increase in foreign real national income.
• D) a decrease in foreign real national income.

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Definitions:

Variable Cost

Expenses that change directly in relation to fluctuations in production levels or the volume of sales.

Fixed Cost

Expenses that do not change with the level of goods or services produced by the business over a given period.

High-Low Method

A technique used in cost accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.

Variable Cost

Outlays that move in tandem with the level of production or the scale of sales.