When the Economy's AS Curve Is Positively Sloped,the Multiplier in the AD/AS

question 79

Multiple Choice

When the economy's AS curve is positively sloped,the multiplier in the AD/AS model is

• A)constant.
• B)equal to one.
• C)equal to the simple multiplier.
• D)smaller than the simple multiplier.
• E)larger than the simple multiplier.

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Definitions:

Monopolistically Competitive

A market structure characterized by many firms offering products that are similar but not identical, allowing for some degree of market power.

Average Total Cost

Total cost divided by quantity of output produced. Also referred to as average cost.

Marginal Decision Rule

A strategy in economics where decisions are made based on the additional benefits and costs of a small change in the production or consumption.

MC < MR

A condition where marginal cost is less than marginal revenue, suggesting that increasing production can lead to higher profits.