Exhibit 10-8 -In the Short Run,if the Economy Is Operating Below Potential

question 31

Multiple Choice

Exhibit 10-8
-In the short run,if the economy is operating below potential output and if the aggregate supply curve shifts outward,then the price level will

• A)decrease and output will increase
• B)increase and output will decrease
• C)decrease and output will decrease
• D)increase and output will increase
• E)increase and output will remain unchanged

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Definitions:

Producer Surplus

The difference between the amount that producers are willing to accept for a good or service and the actual amount they receive.

Costly Negotiations

Negotiation processes that involve significant expenses, time, or resources, which can affect the willingness of parties to reach an agreement.

High-value

Refers to goods or services that have a substantial value in monetary terms or significant importance to a particular process or situation.

Expected Revenue

The amount of money a business anticipates receiving from its activities or sales within a specific period.