When the Short-Run Aggregate Supply Curve Is Steep,then for a Given

question 200

Multiple Choice

When the short-run aggregate supply curve is steep,then for a given increase in aggregate demand,

• A)the increase in real GDP will be relatively small and the increase in the price level will be relatively large
• B)the increase in real GDP will be relatively large and the increase in the price level will be relatively small
• C)the increases in real GDP and the price level will be large
• D)the increases in real GDP and the price level will be small
• E)the decrease in real GDP will be larger than the decrease in the price level

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a balanced market.

Binding Price Floor

A minimum price set by the government that is above the equilibrium price, resulting in a surplus of the product.

Equilibrium Price

The price at which the quantity of a good or service supplied equals the quantity demanded, leading to market stability.

Price Controls

Government-imposed limits on the prices charged for goods and services, typically set above or below the market equilibrium.