The Aggregate Supply Curve Relates the Price Level to the Quantity

question 25

Multiple Choice

The aggregate supply curve relates the price level to the quantity of output that firms would like to produce and sell, given the assumption that

• A)all firms are price setters.
• B)technology and the prices of all factors of production do not remain constant.
• C)technology and the prices of all factors of production remain constant.
• D)unit costs remain constant.
• E)all firms are price takers.

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Definitions:

Microlending

The provision of small loans to entrepreneurs and small businesses lacking access to banking and related services.

Human Capital

The knowledge and skills that make a person productive.

Aggregate Demand

Aggregate demand represents the total demand for all goods and services within a country's economy at a given overall price level and in a given time period.

Production Possibilities Curve

A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed.