12.2 Equilibrium in Aggregate Demand and Supply Analysis

question 54

Multiple Choice

12.2 Equilibrium in Aggregate Demand and Supply Analysis
AD - AS Equilibrium
-On the graph above,consider a point A on the aggregate demand curve and above the aggregate supply curve.At this point,________.

• A)quantity demanded equals output,but the inflation rate will fall,so output will rise
• B)quantity demanded is greater than quantity supplied,so the inflation rate will rise
• C)output is greater than the quantity demanded,so output will fall
• D)the aggregate demand curve will shift to the right until quantity demanded is equal to quantity supplied
• E)none of the above

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Definitions:

Capital Gain

The profit earned from the sale of an asset or investment when the selling price exceeds the purchase price.

Discount Bond

A bond that is sold for less than its face value, typically because the prevailing interest rates are higher than the bond's coupon rate.

Bond Contract

A legal document that outlines the terms of a bond issuance, including the interest rate, maturity date, and issuer's obligations.

Dividend Restriction Clause

A provision in a contract that limits or restricts the ability of a company to pay dividends to its shareholders.