Aggregate Supply Curves (1)

question 36

Multiple Choice

Aggregate Supply Curves (1)
-Based on the graph above,if the economy is at point 2,then (assuming no price shocks and no changes in actual and potential output) the inflation rate next period will be ________ percent.

• A)5
• B)3.5
• C)4.5
• D)4
• E)none of the above

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Definitions:

Market Price

The price at which a good or service is offered in the marketplace.

Differentiated Products

Products that are distinguished from similar products by unique characteristics, branding, or quality, allowing companies to compete beyond price.

Perfectly Competitive

A descriptor of a market scenario where firms face many competitors, sell identical products, and have no control over the market price, leading to optimal efficiency and resource allocation.

Short Run

A time period in which at least one input, like plant size, is fixed and cannot be changed by the firm.