Suppose the Short-Run Aggregate Supply Curve Is Steep

question 80

Multiple Choice

Suppose the short-run aggregate supply curve is steep.For a given increase in aggregate demand, how much will real GDP and price level increase?  

• 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 increase in real GDP will be large, and the increase in price level will be large. 
• D) The increase in real GDP will be small, and the increase in price level will be small.

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Definitions:

Learning Process

The ongoing process of acquiring new understanding, knowledge, behaviors, skills, values, or preferences, often facilitated through various methods of education or experience.

Minimum Efficient Scale

The smallest level of production at which long-term average costs are minimized, enabling businesses to achieve the best possible economies of scale.

Domestic Consumption

The total amount of goods and services consumed within a country's borders.

Plants Producing

The process by which plants manufacture their own food, primarily through photosynthesis, contributing to the ecosystem's productivity.