Other Things Being Equal, the Flatter the AS Curve for the Economy

question 54

Multiple Choice

Other things being equal, the flatter the AS curve for the economy , the

• A)smaller the impact on real output from any given increase in the money supply.
• B)more sensitive the aggregate expenditure function to changes in the interest rate.
• C)smaller the impact on the price level from any given increase in the money supply.
• D)larger the impact on the price level from any given increase in the money supply.
• E)less sensitive the aggregate expenditure function to changes in the interest rate.

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Definitions:

Output

The quantity of products or services produced by a company, a sector, or an economy within a specified period.

Profit

The profit made when the income from a business operation surpasses the expenditures, costs, and taxes required to maintain that operation.

Zero Marginal Cost

Zero marginal cost describes a situation where producing one additional unit of a good or service does not increase the total cost of production.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, which are incurred regardless of the quantity produced.