The Quantity of Real GDP Supplied Decreases If the Price

question 153

Multiple Choice

The quantity of real GDP supplied decreases if the price level ________ because it ________ profits.

• A)rises; increases
• B)rises; decreases
• C)falls; increases
• D)falls; decreases
• E)None of the above answers are correct because the AS curve is vertical so that the quantity of real GDP supplied does not change when the price level changes.

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Definitions:

Average Inventory

The mean value of inventory over a certain time period, used for inventory management and planning.

Carrying Cost

The total cost of holding inventory, including storage, insurance, and obsolescence.

Net Present Value

A calculation that compares the value of all cash inflows and outflows of a project or investment using a discount rate.

Accounts Receivable Approach

A method for managing and analyzing a company's incoming payments or receivables from customers to whom it extends credit.