Based on Your Understanding of the AS- AD Model, Which

question 21

Multiple Choice

Based on your understanding of the AS- AD model, which of the following is an incorrect statement about the short- run adjustment process for the macroeconomy?

• A) A decrease in output decreases employment.
• B) Output in excess of the natural level leads to higher prices.
• C) An increase in demand increases output.
• D) An increase in unemployment leads to higher prices.
• E) A decrease in output below the natural level leads to lower nominal wages.

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Definitions:

Output

refers to the quantity of goods or services produced by a firm, industry, or economy within a specific period.

Marginal Cost

Marginal cost is the cost of producing one additional unit of a product or service.

Output

The total amount of goods or services produced by a person, machine, business, country, etc., during a given period.