On the Long-Run Aggregate Supply Curve

question 232

Multiple Choice

On the long-run aggregate supply curve

• A)an increase in the price level increases the aggregate quantity of GDP supplied.
• B)an increase in the price level reduces the aggregate quantity of GDP supplied.
• C)an increase in the price level has no effect on the aggregate quantity of GDP supplied.
• D)an increase in the price level increases the level of potential GDP.

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Definitions:

Direct Labor

The labor or work performed by employees who are directly involved in the production of goods or services.

Nonmanufacturing Cost

Expenses not directly tied to the production of goods, such as administrative, sales, and marketing costs.

Prime Costs

The combined direct costs of raw materials and labor that are directly involved in the production of a product.

Indirect Material

Materials used in the manufacturing process that are not directly incorporated into the final product, such as lubricants and cleaning supplies.