The Aggregate Demand and Aggregate Supply Graph Has

question 38

Multiple Choice

The aggregate demand and aggregate supply graph has

• A)the price level on the horizontal axis.The price level can be measured by the GDP deflator.
• B)the price level on the horizontal axis.The price level can be measured by real GDP.
• C)the price level on the vertical axis.The price level can be measured by the GDP deflator.
• D)the price level on the vertical axis.The price level can be measured by GDP.

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Definitions:

Economic Profits

The total revenue of a business minus its explicit and implicit costs; it’s a measure of excess above the normal levels of profits businesses earn in a competitive environment.

Long-Run Equilibrium

A state in which supply equals demand, all firms are maximizing profits, and there is no incentive for market entry or exit.

Efficient Output

The level of production at which a firm or economy can produce the maximum amount of goods at the lowest possible cost.

Efficient Output

The level of production where a firm or economy can produce the maximum amount of goods and services with the least amount of inputs.