An Explanation for Why the Short-Run Aggregate Supply Curve Is

question 46

Multiple Choice

An explanation for why the short-run aggregate supply curve is upward-sloping is because:

• A) ​the quantity of real output supplied is inversely related to the aggregate supply curve.
• B) ​nominal incomes are fixed.
• C) ​the capital-output ratio is fixed.
• D) ​an increase in price will increase the marginal aggregate output.​

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Definitions:

Expected Earnings

The forecasted income of a company, often used by investors to gauge future profitability.

Constant-Growth DDM

A dividend discount model that assumes a constant rate of dividend growth indefinitely, used to estimate the value of a stock.

CAPM

The Capital Asset Pricing Model is a formula that describes the relationship between the expected return of an investment and its risk, used to estimate a security's expected return based on its beta and the market's expected return.

Market Capitalization Rate

The Market Capitalization Rate refers to the expected rate of return on an investment or project, derived from the market price of a company's shares.