Consider an Economy with a Relatively Steep AS Curve

question 63

Multiple Choice

Consider an economy with a relatively steep AS curve.If there is a shift to the right in the AD curve,there will be a ________ in the price level and ________ in national output.

• A)small increase; a large increase
• B)small increase; a large decrease
• C)large increase; a small increase
• D)large increase; a small decrease
• E)large increase; no change

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Definitions:

Interest Rate

The cost of borrowing money or the reward for saving, usually expressed as a percentage of the principal amount per period.

$100

A monetary denomination or value equivalent to one hundred U.S. dollars.

Usury Laws

Regulations governing the maximum interest rates that can be charged on loans, intended to prevent excessive charges.

Borrowers

Individuals or entities that receive funds from a lender under the agreement to repay the principal amount along with interest or other charges.