If There Is a Surplus, ____ Will Be Frustrated by Their

question 18

Multiple Choice

If there is a surplus, ____ will be frustrated by their inability to exchange at the current price, and they will compete the prices ____ as a result.

• A)buyers; up.
• B)buyers; down.
• C)sellers; up.
• D)sellers; down.

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Definitions:

Aggregate Demand Curve

A graphical representation showing the relationship between the overall price level in an economy and the total demand for goods and services.

Potential Output

The maximum amount of goods and services an economy can produce when it is most efficiently utilizing its resources.

Expansionary Gap

A situation in an economy where actual gross domestic product exceeds the potential GDP, leading to inflationary pressures.

Natural Rate

The level of economic output at which the rate of inflation is stable, often related to the concept of the natural rate of unemployment where the labor market is in equilibrium.