The Country of Mu Has Continuous Strong Economic Growth and a Steady

question 36

Multiple Choice

The country of Mu has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing ____________aggregate supply.

• A) at the same pace as long-run
• B) slower than long-run
• C) faster than long-run
• D) slower than short-run

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Definitions:

Marginal Expenditure Curve

A graph that shows the additional cost incurred by acquiring one more unit of a good or service.

Monopsony

A market situation in which there is only one buyer for a product or service, giving that buyer substantial power over prices.

Rightward Shift

A movement to the right on a graph, indicating an increase in quantity supplied or demanded at a given price.

Subsidy

Payment reducing the buyer’s price below the seller’s price; i.e., a negative tax.