If We Observe an Increase in Real GDP and an Increase

question 270

Multiple Choice

If we observe an increase in real GDP and an increase in the price level after an increase in aggregate demand, we can conclude that

• A) the aggregate supply curve is upward sloping.
• B) the aggregate supply curve is horizontal.
• C) the aggregate supply curve is vertical.
• D) the economy is now at full employment.

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Definitions:

Permanent

Lasting or intended to last or remain unchanged indefinitely.

Transitory

Pertaining to or lasting for only a short period of time; temporary and fleeting in nature.

Unmodulated Color

A color that is consistent in hue and intensity across a surface, without gradation in tone or shade.

Medium

The material (for example, marble, bronze, clay, fresco) in which an artist works; also, in painting, the vehicle (usually liquid) that carries the pigment.