In the Late 1990s and Early 2000s

question 30

Multiple Choice

In the late 1990s and early 2000s:

• A)both AD and AS increased
• B)inflation was relatively high.
• C)AD increased but AS decreased.
• D)AD decreased but AS increased.

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Definitions:

Constant Returns to Scale

A condition in production where increasing the inputs results in a proportional increase in output.

Diseconomies of Scale

A condition in which a firm experiences increased costs per unit when it scales up its production due to inefficiencies.

Output Q₁

A specific quantity of goods or services produced by a firm or economy at a given time, indicated as "Q₁" to denote a particular level of output.

Output Q₃

Refers to a specific quantity of output, often used in economic models to represent production levels at a particular point.