If the original level of aggregate demand is AD0, then an expansionary monetary policy that shifts aggregate demand to AD1 will
only:A. create an inflationary increase in price level.
B. create an increase in GDP.
C. create an increase in unemployment.
D. create a deflationary loss in price level.
B. create an increase in GDP.
C. create an increase in unemployment.
D. create a deflationary loss in price level.
1 answer:
Answer:
A. create an inflationary increase in price level.
Explanation:
A shift of the AD curve to AD1 as a result of expansionary monetary policy, indicates that the AD curve increased and shifted to the right.
A shift to the AD curve to the right increase aggregate price and quantity.
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Answer:
c. half of the order quantity
Explanation:
Based on the constant demand assumption in the economic order quantity (EOQ) model, the average cycle inventory is <u>half of the order quantity</u>
Economic order quantity is a quantity which minimizes the ordering cost and holding cost
Q = EOQ = where D = Demand unit, S = Order cost and H = Holding cost
- Ordering cost and the Holding at EOQ will be same
- Average inventory = Q/2
- Average inventory is the half of the order quantity.