As Firms Raise Output in Response to Rising Aggregate Demand

question 39

Multiple Choice

As firms raise output in response to rising aggregate demand,

• A) resources become scarce, wages eventually rise, and a point is reached beyond which output cannot expand
• B) they become increasingly efficient and are thus able to pass the cost savings on to consumers in the form of lower prices
• C) real wages fall, interest rates rise, and consumers buy less
• D) they hire fewer workers and substitute capital for labor
• E) the level of nominal GDP falls, though real GDP rises

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Definitions:

Living Standards

indicate the wealth, comfort, material goods, and necessities available to a person or society, often used as a measure of economic well-being.

Output Per Capita

The average production of goods and services per person, often used as a measure of a country's standard of living or economic performance.

Low-Income Countries

Countries classified as low-income have significantly lower GDP per capita compared to the global average, often indicating limited economic development.

Malnutrition

A condition that results from eating a diet in which one or more nutrients are either not enough or are too much, leading to health problems.