If the Economy Is Operating at a Point at Which

question 164

Multiple Choice

If the economy is operating at a point at which short-run aggregate supply is horizontal, then

• A) real GDP cannot expand.
• B) real GDP cannot contract.
• C) increases in aggregate demand do not increase the price level.
• D) then increases in aggregate demand do not increase real GDP.

---

Definitions:

Mutually Exclusive

Situations or events that cannot occur at the same time; choosing one option excludes the choice of another.

Cash Flows

The total sum of money transfers both incoming and outgoing in a firm, majorly affecting its financial readiness.

Profitability Index (PI)

The present value of an investment’s future cash flows divided by its initial cost; also benefit/cost ratio.

Straight-Line Depreciation

A framework for spreading out the cost of a physical asset across its useful lifespan in identical yearly contributions.