If the Price Level Kept Increasing, the Short-Run Aggregate Supply

question 234

Multiple Choice

If the price level kept increasing, the short-run aggregate supply (SRAS) curve would get steeper because

• A) all the unemployed would eventually be hired.
• B) there are limits to how long workers can work long hours and capital can go without proper maintenance.
• C) the rate at which capacity can be expanded increases indefinitely.
• D) the long-run aggregate supply curve is horizontal.

---

Definitions:

Variable Costs

Expenses that vary in relation to the amount of product or service produced by a company.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Break-even Point

The point at which total costs and total revenue are equal, meaning there is no net loss or gain.

Variable Costs

Costs that vary in direct proportion to the volume of output or level of activity.