When the Short-Run Aggregate Supply Curve Is Steep,then for a Given

question 200

Multiple Choice

When the short-run aggregate supply curve is steep,then for a given increase in aggregate demand,

• A)the increase in real GDP will be relatively small and the increase in the price level will be relatively large
• B)the increase in real GDP will be relatively large and the increase in the price level will be relatively small
• C)the increases in real GDP and the price level will be large
• D)the increases in real GDP and the price level will be small
• E)the decrease in real GDP will be larger than the decrease in the price level

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Definitions:

Variable Operating Costs

Costs that fluctuate with the level of production or sales volume, such as materials and labor.

Labor Hour

A measurement of work output or productivity calculated as the amount of labor input in terms of hours expended.

Time and Materials Pricing

A pricing strategy where the customer pays for the time spent on a project and the materials used, commonly used in service and contracting industries.

Variable Costs

Expenses that fluctuate in direct proportion to changes in the level of business activity or production volume, such as raw materials and direct labor.