Consider the Basic AD/AS Model

question 26

Multiple Choice

Consider the basic AD/AS model.Suppose firms are currently producing beyond their normal capacity.A change in AD leads to a relatively

• A)large change in price level and a large change in real GDP.
• B)large change in price level and a small change in real GDP.
• C)small change in price level and a large change in real GDP.
• D)small change in price level and a small change in real GDP.
• E)no change in both price and output.

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Definitions:

Protestant Ethic

A concept in sociology that associates the rise of capitalism with Protestant values of hard work, frugality, and diligence.

Spirit of Capitalism

A term from Max Weber's sociology referring to the set of ethical and cultural values that encourage hard work, frugality, and efficiency in pursuit of economic success.

Iron Cage

A concept introduced by Max Weber to describe the increased rationalization inherent in social life, particularly in Western capitalist societies, leading to individuals feeling trapped by systems and bureaucracy.

Rationality

The quality or state of being reasonable, based on facts or reason, guiding behavior or beliefs by logic rather than emotion or tradition.