When Production Costs Rise, in the Short Run

question 35

Multiple Choice

When production costs rise, in the short run:

• A)the aggregate-supply curve shifts down to the right
• B)the aggregate-demand curve shifts down to the left
• C)the aggregate-demand curve shifts up to the right
• D)the aggregate-supply curve shifts up to the left
• E)both the aggregate-demand curve and the aggregate-supply curve shift to the left

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Definitions:

Retaining Earnings

The practice of holding onto a company's profits to reinvest in the business rather than distributing them as dividends to shareholders.

Net Worth

The total assets minus total outside liabilities of an individual or a company.

Interest Rate

The cost of borrowing money or the return on savings, expressed as a percentage of the principal.

Annual Interest Rate

The percentage of the principal that is paid as a fee over a period of one year for borrowing or saving money.