Although the Increase in Long-Run Aggregate Supply (Other Things Equal)

question 31

Multiple Choice

Although the increase in long-run aggregate supply (other things equal) , would expand real GDP and lower the price level, the declines in the price level has not been part of Canada's growth experience.This is because:

• A)the Bank of Canada has taken no action to change the nation's money supply.
• B)the Bank of Canada has increased the money supply much less than the increase in aggregate supply.
• C)the increase in the money supply by Bank of Canada has matched the increase in aggregate supply.
• D)the Bank of Canada usually engineers inflationary rightward shifts of the aggregate demand curve that are faster than the deflationary rightward shifts of the aggregate supply curve.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of the business, whichever is longer.

Minimum Required Rate Of Return

The lowest expected return on an investment deemed acceptable by an investor or manager, based on the level of risk and alternative opportunities.

Average Operating Assets

The average value of assets utilized in a business's operations, calculated over a specific period to assess performance.

Operating Expenses

Costs associated with the day-to-day operations of a business, such as rent, utilities, and payroll, excluding the cost of goods sold.