A Common Assumption Among Macroeconomists Is That When Real GDP

question 110

Multiple Choice

A common assumption among macroeconomists is that when real GDP exceeds potential output,factor prices rise and the

• A)AS curve shifts to the left.
• B)AD curve shifts to the right.
• C)AS curve shifts to the right very rapidly.
• D)AD curve shifts to the left rapidly.
• E)none of the above - the AS curve remains unchanged.

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Definitions:

Company Cost

Expenses incurred by a business in the process of earning revenues, often categorized into fixed and variable costs.

Diversifiable Risk

Refers to the risk that can be reduced or eliminated in a portfolio through diversification, which involves investing in a variety of assets.

Nonsystematic Risk

The part of total risk that is specific to an individual asset or company, and can be reduced through diversification.

Asset's Beta

A measure of an asset's volatility in relation to the overall market, indicating its risk compared to that of the market average.