The Upward Slope of the Short-Run Aggregate Supply Curve Is

question 4

Multiple Choice

The upward slope of the short-run aggregate supply curve is based on the assumption that

• A)wages and other resource prices do not respond to price level changes.
• B)wages and other resource prices do respond to price level changes.
• C)prices of outputs do not respond to price level changes.
• D)prices of inputs are flexible, while prices of outputs are fixed.

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Definitions:

Real Interest Rates

The interest rate adjusted for inflation, representing the true cost of borrowing and the real yield to an investor.

Net Capital Outflow

The difference between a country's total exports of capital and total imports of capital over a certain period, indicating how much capital is flowing out of the country in comparison to what is coming in.

U.S. Bonds

Debt securities issued by the United States Department of the Treasury to finance government spending as an alternative to taxation.

NX

Stands for Net Exports, which is the difference between a country's total value of exports and total value of imports.