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Given That the Economy Is Operating in the Horizontal Section

question 73

Multiple Choice

Given that the economy is operating in the horizontal section of the aggregate supply curve in the simple Keynesian model,an increase in autonomous spending will ____________________,assuming that the economy remains in the horizontal section of the aggregate supply curve.


Definitions:

Producer Surplus

The gap between the price that sellers are prepared to accept for a product and the real price it sells for in the market.

Total Variable Costs

The total of all costs that vary with the level of production or output.

Fixed Costs

Costs that do not change with the level of output or business activity, such as rent, salaries, or loan payments.

Marginal Costs

The extra cost incurred for producing one additional unit of a product or service.

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