An Increase in the Actual Price Level Does Not Shift

question 20

True/False

An increase in the actual price level does not shift the short-run aggregate supply curve, but an expected increase in the price level shifts the short-run aggregate supply curve to the left.

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Definitions:

Short Run

A period in which at least one factor of production is fixed, and firms can adjust only to a limited set of variables.

TR < TVC

This expression denotes a situation where Total Revenue (TR) is less than Total Variable Costs (TVC), indicating a loss-making scenario for the business.

Minimum AVC

The lowest point of the average variable cost curve where each unit of production is at its cheapest.

Short Run

A period during which at least one factor of production is fixed, leading to limitations in output adjustment.