Which of the Following Explains Why Higher Prices in the Goods

question 180

Multiple Choice

Which of the following explains why higher prices in the goods and services market will lead to an upward sloping short-run aggregate supply curve?

• A) The higher prices will temporarily improve profit margins because many of the cost components of firms will be fixed in the short run.
• B) The higher prices will reduce the purchasing power of the fixed quantity of money and, thereby, stimulate additional output.
• C) The higher prices will expand the economy's resource base and, thereby, stimulate additional output.
• D) The higher prices will improve technology and, thereby, stimulate additional output.

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Definitions:

Random Sampling

A method in statistics for selecting a subset of individuals from a population in such a way that each individual has an equal chance of being selected.

Inductive Argument

Reasoning that moves from specific instances to a generalized conclusion, typically involving probability rather than certainty.

Premises

Statements or ideas that form the basis for a reasoned argument or the background against which an argument is formed.

Conclusion

The statement that logically follows from the premises in a logical argument, often signified by therefore.