Because Decreases in the Price Level Increase Planned Aggregate Expenditure

question 35

Multiple Choice

Because decreases in the price level increase planned aggregate expenditure and short-run equilibrium output,

• A) the short-run aggregate supply line is horizontal.
• B) the short-run aggregate supply line is upward-sloping.
• C) the aggregate demand curve is horizontal.
• D) the aggregate demand curve is downward-sloping.
• E) the aggregate demand curve is upward-sloping.

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Definitions:

Alternative Investments

Investments in asset classes other than stocks, bonds, and cash, such as real estate, hedge funds, or commodities.

Differential Cost

The variance in price between two different choices or alterations in production volumes.

Manufacturing Operations

The processes and activities involved in the production of goods, typically in a factory setting, involving the conversion of raw materials into finished products.

Unused Capacity

Represents the difference between a company's actual production levels and its maximum potential output, indicating resources that are not being fully utilized.