In the Short Run, If Prices Were Below Equilibrium

question 128

Multiple Choice

In the short run, if prices were below equilibrium,

• A) excess aggregate demand for goods and services would place downward pressure on prices.
• B) excess aggregate supply of goods and services would place downward pressure on prices.
• C) excess aggregate demand for goods and services would place upward pressure on prices.
• D) excess aggregate supply of goods and services would place upward pressure on prices.

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Definitions:

Human Capital

The knowledge and skills that make a person productive.

Aggregate Demand

Aggregate demand represents the total demand for all goods and services within a country's economy at a given overall price level and in a given time period.

Production Possibilities Curve

A curve showing the different combinations of two goods or services that can be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed.

Foreign Aid

Economic, technical, or military assistance given by one country to another for purposes of relief and redevelopment, economic stabilisation, or mutual defense.