Suppose the Economy Is on the Intermediate Range of the Aggregate

question 113

Multiple Choice

Suppose the economy is on the intermediate range of the aggregate supply curve.Which of the following would reduce both real GDP and the price level?

• A) A decrease in aggregate supply.
• B) An increase in aggregate supply.
• C) A decrease in aggregate demand.
• D) An increase in aggregate demand.

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Definitions:

Variable Cost

Costs that vary in direct relation to a business's operations, like expenses for raw materials or manufacturing supplies.

Activity Decreases

Reductions in the volume or intensity of activities, often leading to lower costs or changes in operational strategies.

Cost Estimation

The process of predicting the amount of resources, especially money, time, and labor, necessary to complete a project or produce a product.

Strong Correlation

A statistical relationship between two variables where a change in one is strongly associated with a change in the other.