According to the Model of Aggregate Supply and Aggregate Demand

question 24

Multiple Choice

According to the model of aggregate supply and aggregate demand, in the long run, an increase in the money supply should cause prices to

• A) rise and output to rise.
• B) fall and output to remain unchanged.
• C) fall and output to fall.
• D) rise and output to remain unchanged.

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Definitions:

Average Variable Cost

The total variable costs (costs that change with production levels) divided by the quantity of output produced, representing the per-unit variable cost.

Total Cost

The sum of all costs incurred by a firm in producing a certain level of output, including both fixed and variable costs.

Variable Cost

Costs that are directly correlated with the quantity of production or output generated.

ATC Curve

The Average Total Cost curve, a graph that shows the cost per unit of output at different levels of production, typically U-shaped due to economies and diseconomies of scale.