The Long-Run Aggregate Supply Curve Implies That

question 63

Multiple Choice

The long-run aggregate supply curve implies that:

• A) in?ation can be lowered by reducing aggregate supply.
• B) increases in aggregate demand will be in?ationary.
• C) aggregate demand needs to increase in order for the economy to grow.
• D) supply is highly responsive to changes in the price level.

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Definitions:

Budget Proportion

The allocation of financial resources among various categories or items in a budget.

Necessity

A good or service that is essential for living and is deemed indispensable.

Few Substitutes

A market condition where there are limited alternative products or services available to consumers, often leading to higher prices.

Price-Elastic

A descriptor for goods or services whose demand significantly changes with a change in price.