With a Steep Short-Run Aggregate Supply Curve

question 270

Multiple Choice

With a steep short-run aggregate supply curve,

• A) an increase in taxes that does not change potential GDP will not decrease real GDP by much.
• B) fiscal policy will be an effective tool to reduce unemployment without raising prices too much.
• C) there is a large change in real GDP whenever the price level rises.
• D) an increase in government expenditure will not have an impact on the price level.

Understand how barriers to entry affect market structure and competition.

Describe how firms in different market structures make decisions regarding output, price, and competition.

Analyze demand curves in various theoretical market situations and understand the relevance to market power.

Recognize the role of government regulation in imperfectly competitive markets.