The Price Level Falls If

question 88

Multiple Choice

The price level falls if

• A) aggregate demand increases more rapidly than aggregate supply.
• B) aggregate demand increases more slowly than aggregate supply.
• C) aggregate demand increases and aggregate supply does not change.
• D) neither aggregate demand nor aggregate supply change.

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Definitions:

Overallocation of Resources

A situation where resources are distributed or utilized excessively in one area at the expense of others, leading to inefficiency.

Rising Health Care Costs

The increase in the price of services and goods within the healthcare sector over time, affecting consumers, insurers, and government budgets.

Real Wages

Wages adjusted for inflation, representing the purchasing power of income earned from work.

Fringe Benefit

Additional compensation provided to an employee beyond their regular salary, such as health insurance, pension plans, and paid time off.