If the Short-Run Aggregate Supply Increases by Less Than the Long-Run

question 67

Multiple Choice

If the short-run aggregate supply increases by less than the long-run aggregate supply, then, at the short-run equilibrium,

• A)GDP will be below potential GDP.
• B)aggregate demand will increase.
• C)GDP will be above potential GDP.
• D)GDP will be equal to potential GDP.
• E)unemployment will fall.

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Definitions:

Inventory Value

The total cost or market value of all the goods and materials held by a company intended for sale.

Beginning Inventory

The total value of a company's inventory at the start of an accounting period.

Net Sales

The amount of sales generated by a company after deductions for returns, allowances for damaged or missing goods, and discounts.

Markup

The percentage of the cost price of items that is added on to cover overhead expenses and profit.