Which of the Following Is a Defining Assumption of the AD/AS

question 124

Multiple Choice

Which of the following is a defining assumption of the AD/AS macro model in the short run?

• A)factor supplies are assumed to be flexible
• B)technology used in production is endogenous and variable
• C)the level of potential output fluctuates with the price level
• D)factor prices are assumed to be exogenous
• E)firms cannot operate near their normal capacity

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Definitions:

Area Representation

A system of electing representatives from specific geographical areas, typically used in legislative bodies.

Price

The expenditure necessary to secure a good or service.

Consumer Surplus

The discrepancy between the price consumers are ready to pay for a good or service and the price they end up paying.