Suppose Firms Are Currently Producing Output at a Level Beyond

question 69

Multiple Choice

Suppose firms are currently producing output at a level beyond their normal capacity.In this situation,the AS curve will be relatively ________ and a positive AD shock will result in ________.

• A)steep; an increase in the price level with a small increase in real GDP
• B)flat; an equal increase in the price level and in real GDP
• C)flat; a very small increase in prices but a large increase in real GDP
• D)flat; a very small decrease in the price level and a decrease in real GDP
• E)steep; a decrease in the price level and a very small decrease in real GDP

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Definitions:

Furs

Textiles made from the pelts of animals, historically significant in trade and fashion, but have become controversial due to ethical concerns regarding animal rights.

Exploratory Voyages

Journeys undertaken by explorers to discover unknown lands, map new territories, and establish contacts.

English Colonization

The process of English settlement and establishment of control over regions in North America, the Caribbean, and other parts of the world from the late 16th to the early 18th centuries.

Richard Hakluyt

An English writer and geographer known for promoting the exploration and settlement of North America by the British in the late 16th and early 17th centuries.