At Low Levels of Output, the Economy Can Expand with Little

question 345

Multiple Choice

At low levels of output, the economy can expand with little or no increase in the overall price level because

• A) at low levels of output the aggregate supply curve is negatively sloped.
• B) people will be expecting the price level to fall.
• C) there is excess supply so prices are kept low.
• D) firms likely hold excess labor and capital, and production can be increased without causing input prices to increase.

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