What Determines the Magnitude of the Changes in Price Level

question 24

Multiple Choice

What determines the magnitude of the changes in price level when central bank takes monetary policy measures that leads to a change in the aggregate demand?

• A)Changes in the money supply
• B)Slope of the aggregate supply curve
• C)Rate of change of interest rate
• D)Total money supply in the economy

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Definitions:

Barriers To Entry

Barriers to entry are obstacles that make it difficult for new competitors to enter an industry, including high initial investment costs, strict regulations, or strong brand loyalty among existing customers.

Perfect Competition

A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and perfect information.

Price Takers

Firms or individuals who accept the market price as given and have no influence over it.

Differentiated Products

Goods that are distinguished from one another by quality, design, branding, and other features that make them unique to consumers.