Given Aggregate Demand, a Decrease in Aggregate Supply Creates

question 89

Multiple Choice

Given aggregate demand, a decrease in aggregate supply creates:

• A) a higher price level and a higher GDP level.
• B) a lower price level and a higher GDP level.
• C) cost-push inflation.
• D) demand-pull inflation.

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Definitions:

Price Of Capital

The cost of utilizing capital or funds in the production of goods or services, often expressed as an interest rate.

Slope

In mathematics, the steepness or incline of a line on a graph, representing the rate of change of variables.

Isocost

Represents lines on a graph showing combinations of inputs that cost the same amount.

Capital

Capital refers to financial assets or the financial value of assets, such as cash and buildings, used by a business to produce goods and services.