The Basic Aggregate Demand and Aggregate Supply Curve Model Helps

question 134

Multiple Choice

The basic aggregate demand and aggregate supply curve model helps explain

• A)short-term fluctuations in real GDP and the price level.
• B)long-term growth.
• C)price fluctuations in an individual market.
• D)output fluctuations in an individual market.
• E)which workers will lose their jobs during a recession.

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Definitions:

Price Ceiling

A legally established maximum price a seller can charge for a product or service to prevent market prices from rising too high.

Equilibrium Price

The equilibrium price is the price at which the quantity of a good or service demanded by consumers matches the quantity supplied by producers, resulting in market balance.

Permanent Shortage

Permanent Shortage refers to a situation where the demand for a good or service persistently exceeds its supply, often due to structural issues within the market or supply chain.

Temporary Shortage

A situation where the demand for a product or service exceeds its supply in a short-term period.