When a Production Function Is Graphed with Real GDP on the Vertical

question 53

Multiple Choice

When a production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis,a rise in labor ________________________which shifts the LRAS curve ____________ resulting in ______________________.

• A) shifts the production function up; rightward; economic growth
• B) shifts the production function down; leftward; a shrinking economy
• C) moves us up along a given production function; rightward; economic growth
• D) moves us down along a given production function; leftward; a shrinking economy

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Definitions:

Inflation Rate

The percentage increase in the general price level of goods and services in an economy over a period of time.

Velocity of Money

The rate at which money circulates in the economy, calculated as the ratio of nominal GDP to the money supply, indicating the efficiency with which money is used to facilitate transactions.

Store of Value

An asset that can be saved, retrieved, and exchanged in the future without losing value.

Medium of Exchange

Any item that is widely accepted in exchange for goods and services, thus facilitating trade by eliminating the need for a double coincidence of wants.