The Horizontal Shape of the Immediate Short Run Aggregate Supply

question 47

Multiple Choice

The horizontal shape of the immediate short run aggregate supply implies that:

• A)the total amount of output in the economy depends only on the general price level.
• B)the total amount of output in the economy depends only on the volume of spending.
• C)the total amount of output in the economy is fixed.
• D)the total amount of spending depends on the price of inputs.

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Definitions:

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity supplied.

Supply Curve

A visual chart depicting how the price of a product or service correlates with the amount a vendor is prepared and capable of providing to the marketplace.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, usually represented as the area above the supply curve and below the market price.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that suppliers are willing to offer for sale, holding all other factors constant.