Use the Following to Answer Questions

question 257

Multiple Choice

Use the following to answer questions:
-(Figure: Inflationary and Recessionary Gaps) Refer to Figure: Inflationary and Recessionary Gaps.In panel (a) ,an expansionary policy designed to move the economy from Y₁ to Y_P would attempt to shift the:

• A) aggregate demand curve to the left by increasing aggregate demand.
• B) aggregate demand curve to the right by increasing aggregate demand.
• C) SRAS curve to the left.
• D) LRAS curve to the left.

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Definitions:

Diseconomies of Scale

The situation in which a business grows so large that the costs per unit increase, as opposed to economies of scale where costs per unit decrease with the increase in output.

Long-Run Average Cost Curve

A graphical representation that shows the minimum average cost at which any output level can be produced after all inputs are adjustable. It reflects economies and diseconomies of scale.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to a reduced cost per unit of output.

Search Engine

A software system designed to search for information on the World Wide Web.