Which of the Following Explains Why Higher Prices in the Goods

question 180

Multiple Choice

Which of the following explains why higher prices in the goods and services market will lead to an upward sloping short-run aggregate supply curve?

• A) The higher prices will temporarily improve profit margins because many of the cost components of firms will be fixed in the short run.
• B) The higher prices will reduce the purchasing power of the fixed quantity of money and, thereby, stimulate additional output.
• C) The higher prices will expand the economy's resource base and, thereby, stimulate additional output.
• D) The higher prices will improve technology and, thereby, stimulate additional output.

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Definitions:

Kilograms

A unit of mass in the metric system, widely used globally in science, industry, and medicine to measure body weight or substance amounts.

Conversion Formula

A mathematical equation used to change a measurement from one unit to another.