Using Figure 1 Above, If the Aggregate Demand Curve Shifts

question 131

Multiple Choice

Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:

• A) P1 and Y2.
• B) P3 and Y1.
• C) P2 and Y3.
• D) P2 and Y1.

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Definitions:

Laspeyres Price Index

A measure of the change in the overall price of a specific set of goods and services over time, using the quantities of the goods and services purchased in the base period.

Consumption Bundle

A combination of goods and services that a consumer chooses to consume at a given time.

Prices

The total monetary value expected, called for, or delivered in payment for an object.

Laspeyres Price Index

A price index used to measure the change in the cost of purchasing a fixed basket of goods and services over time, based on the quantities purchased in the base period.