Which of the Following Explains Why Higher Prices in the Goods

question 32

Multiple Choice

Which of the following explains why higher prices in the goods and services market measured by the CPI leads to an upward-sloping aggregate supply curve? ​

• A) ​The higher prices will temporarily improve profit margins because the cost of wages and salaries are fixed in the short run.
• B) ​The higher prices will reduce the purchasing power of the fixed quantity of money and, thereby, stimulate additional output.
• C) ​The higher prices will expand the economy's resource base and, thereby, stimulate additional output.
• D) ​The higher prices will improve technology and, thereby, stimulate additional output.

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Definitions:

Economic Decline

A period characterized by a decrease in the economic performance of a country or region, often marked by a fall in GDP, employment, and investment.

New World

A term historically used to refer to the Americas, indicating their discovery by European explorers during the Age of Exploration.

Disease

A disorder of structure or function in a human, animal, or plant, especially one that produces specific symptoms or that affects a specific location and is not simply a direct result of physical injury.

Discipline

Training to ensure proper behavior, often through regulations and orders, or the controlled behavior resulting from such training.