A Decrease in Aggregate Supply Can Lead To

question 111

Multiple Choice

A decrease in aggregate supply can lead to:

• A) unemployment.
• B) demand-pull inflation.
• C) prosperity.
• D) cost-push inflation.

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Definitions:

Quantity Demanded

The overall volume of a good or service that buyers are prepared and able to acquire at a designated price level.

Price Rises

Occurs when the cost of goods or services increases over a period of time, often due to factors like inflation, demand, or production costs.

Demand

The desire for a particular product or service coupled with the ability and willingness to pay for it.

Perfectly Elastic

A situation in economics where the quantity demanded or supplied responds infinitely or vastly to any change in price.