If We Observe an Increase in Real GDP and an Increase

question 270

Multiple Choice

If we observe an increase in real GDP and an increase in the price level after an increase in aggregate demand, we can conclude that

• A) the aggregate supply curve is upward sloping.
• B) the aggregate supply curve is horizontal.
• C) the aggregate supply curve is vertical.
• D) the economy is now at full employment.

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Definitions:

Subsidiary Company

A company that is completely or partly owned and wholly controlled by another company, referred to as the parent company.

Inventory

An accounting term for goods and materials held by a company in stock with the intention of selling them or transforming them in the production process.

Consolidated Cost

The combined cost of an asset that includes the purchase price and all costs necessary to prepare the asset for its intended use, within a group of consolidated companies.

Cost Method

An accounting method used for investments, where the investment is recorded at cost and adjusted only for dividends received.