Of the Following, Which Is Not Held Constant in the Short

question 16

Multiple Choice

Of the following, which is not held constant in the short run when determining the aggregate supply curve?

• A) Profits
• B) Wages
• C) Rent
• D) Interest
• E) All of these are held constant when determining the short run aggregate supply curve.

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Definitions:

Cross-Price Elasticity

A measure of how much the quantity demanded of one good responds to a change in the price of another good, indicating the relationship between the goods (substitutes or complements).

Substitutes

Goods or services that can be used in place of each other; when the price of one increases, the demand for the other is likely to increase.

Complements

Complements are goods or services that are used together, where the increase in the consumption of one leads to an increase in the consumption of the other.

Price Elasticity

An index indicating how the amount of a product demanded or supplied changes in response to a price variation.