Other Things Remaining the Same, an Increase in the Price

question 76

Multiple Choice

Other things remaining the same, an increase in the price level

• A) increases aggregate supply.
• B) decreases aggregate supply.
• C) increases the quantity of real GDP supplied.
• D) decreases the quantity of real GDP supplied.
• E) neither change aggregate supply nor changes the quantity of real GDP supplied.

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Definitions:

Opportunity Costs

The value of the best alternative that is foregone when a different option is chosen.

Special Order

A one-time order that is not considered part of the company’s normal ongoing business.

Capacity

The maximum output that a business can produce in a given period with available resources.

Production Constraint

Any factor that limits the volume or type of production a company can achieve, such as equipment capacity or availability of materials.