If the Price Level Turns Out to Be Higher Than

question 26

Multiple Choice

If the price level turns out to be higher than expected,

• A)businesses increase production
• B)the potential output level increases
• C)initially,the short-run aggregate supply curve shifts rightward; later,there is an upward movement along that curve
• D)initially,the short-run aggregate supply curve shifts rightward; later,there is a downward movement along that curve
• E)a contractionary gap develops

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Definitions:

Total Product

The total quantity of output produced by a firm during a given time period with a given amount of inputs.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied by producers.

Minimum Point

The lowest point on a curve, often referring to the least cost or output level in various economic or mathematical models.

ATC Curve

The line that graphically represents the average total costs of production at various levels of output.