In the Horizontal Segment of the Aggregate Supply Curve, When

question 38

Multiple Choice

In the horizontal segment of the aggregate supply curve, when GDP:

• A) increases, the price level rises.
• B) decreases, the price level falls.
• C) increases, the price level does not change.
• D) increases, the price level falls.

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Definitions:

Purchasing Power

The real value of money in terms of the quantity of goods or services that one unit of money can buy.

Annual Interest Rate

The percentage rate at which interest is charged or paid on an amount over a year.

Inflation

Refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Purchasing Power

The worth of currency measured by how many goods or services can be purchased with one unit of it.