When Output Falls Below Full Employment Output, We Expect That

question 8

Multiple Choice

When output falls below full employment output, we expect that the:

• A) wages and prices decrease as the short run aggregate supply curve shifts upward over time.
• B) wages and prices decrease as short run aggregate supply curve shifts downward over time.
• C) wages and prices increase as the long run aggregate supply curve shifts upward over time.
• D) wages and prices decrease as the long run aggregate supply curve shifts downward over time.

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Definitions:

Market Price

The existing rate at which an asset or service may be acquired or disposed of on the market.

Utility Consumption

The enjoyment or satisfaction gained by using a good or service.

Factor Markets

Markets where resources, such as labor, capital, and land, are bought and sold.

Resource Allocation

The process of distributing available resources among various projects or business units to maximize the effectiveness and efficiency of utilization.