The Main Reason Why the Economy's Aggregate Supply Curve Slopes

question 111

Multiple Choice

The main reason why the economy's aggregate supply curve slopes upward is that

• A)as the price level rises, businesses incur additional costs.
• B)businesses typically purchase labor and other inputs under long-term contracts that fix the cost of the input in money terms.
• C)as the price level rises, workers have higher real wages to spend for additional consumer goods.
• D)All of these responses are correct.

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Definitions:

Common Stock

A form of corporate equity ownership, a type of security that represents a fraction of ownership in a corporation, giving holders voting rights and a share in the company’s profits.

Dividend Payout Ratio

The fraction of net earnings a firm pays out to its shareholders as dividends, showing the portion of earnings distributed relative to the amount retained.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities.

Net Income

The total profit of a company after all expenses, including taxes, have been deducted from revenues.