Suppose a Prolonged War in a Country Destroys 30% of the Capital

question 65

Multiple Choice

Suppose a prolonged war in a country destroys 30% of the capital stock.In the long run,the price level will ________ as ________.

• A) increase; short-run aggregate supply decreases
• B) decrease; both long-run and short-run aggregate supply decrease
• C) decrease; long-run aggregate supply decreases
• D) remain unchanged; long-run aggregate supply decreases
• E) increase; both long-run and short-run aggregate supply decrease

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Definitions:

Marginal Utility

The additional satisfaction or utility a consumer receives from consuming one more unit of a good or service.

Marginal Utility

Marginal utility represents the additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.

Total Utility

The sum satisfaction or benefit that a consumer receives from consuming a particular quantity of goods or services.

Consumer Surplus

The variance between the aggregate sum consumers are prepared and able to spend on a good or service versus what they truly pay.