In Constructing the Short-Run Aggregate Supply Curve,we Define the Short

question 135

Multiple Choice

In constructing the short-run aggregate supply curve,we define the short run as the period in which:

• A)the price level is constant.
• B)output is fixed.
• C)profit is constant.
• D)the costs of some resources are fixed.
• E)the economic growth rate is less than 4 percent.

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Definitions:

Real Exchange Rate

The rate at which two currencies can be exchanged after adjusting for inflation differences.

Purchasing-Power Parity

An economic theory stating that in the absence of transaction costs and with efficient markets, equivalent goods should have the same price when converted into a common currency.

Purchasing-Power Parity

A theory which posits that currencies are in equilibrium in terms of exchange rates when the purchasing power in both countries is identical.

Gold

A yellow precious metal valued for its rarity, durability, and use in jewelry, electronics, and as a form of currency.