In a Binding Situation

question 129

Multiple Choice

In a binding situation,

• A) only changes in the price level change the interest rate.
• B) only changes in the Z factors change the interest rate.
• C) changes in neither the price level nor in the Z factors change the interest rate.
• D) the interest rate is always negative.

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Definitions:

Short-run Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity supplied over a short period, during which at least one input is fixed.

Break-even Point

The point at which total cost and total revenue are equal, meaning there is no net loss or gain.

Long-run Supply Curve

A graphical representation showing the relationship between the price of a good and the total output produced by firms in the market in the long-run, where all inputs can be varied.

Marginal Analysis

An examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.