When Output Is Below Its Full-Employment Level, the Short-Run Aggregate

question 29

Multiple Choice

When output is below its full-employment level, the short-run aggregate supply will shift down and to the right because

• A)the expected price level will be below the actual price level.
• B)workers' wages will decline.
• C)prices of nonlabor inputs will rise.
• D)workers' wages will rise.

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Definitions:

Excess Return

The return on an investment over the risk-free rate or over an investment's benchmark.

Rapid Growth

Rapid Growth refers to a significant and faster-than-average increase in the size, revenue, or market share of a company or economy.

Economy

The large system that encompasses all production, exchange, distribution, and consumption of goods and services within a certain area. It involves activities and interactions among individuals, businesses, and governments.

Minimum-Variance Portfolio

A portfolio constructed to achieve the lowest possible risk (variance) for a given level of expected return, optimizing the risk-return tradeoff.