If Households and Firms Expect Higher Rates of Inflation, the ______

question 68

Multiple Choice

If households and firms expect higher rates of inflation, the ______ curve will shift _____.

• A)AD; rightward
• B)AS; rightward
• C)AS; leftward
• D)AD; until it becomes vertical

Understand the concept of absolute and comparative advantage.

Analyze the opportunity cost associated with the production of different goods.

Determine specialization and trade benefits in a two-party system.

Identify how specialization can lead to an increase in overall production and consumption.

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Definitions:

Industry Type

A classification that groups companies based on similar business activities, products, or services.

Increasing Cost Industry

An industry in which costs per unit of output rise as the scale of production increases, often due to resource limitations or increasing input prices.

Factor Prices

The cost of inputs used in production, such as labor, land, and capital, which are influenced by supply and demand for these factors.

Market Supply Curve

A graphical representation showing the relationship between the price of a good or service and the total quantity of it that producers are willing to supply.