The Long-Run Aggregate Supply Curve

question 210

Multiple Choice

The long-run aggregate supply curve

• A) shows that at higher prices, potential real Gross Domestic Product (GDP) increases.
• B) slopes up and to the right.
• C) shows that long-run aggregate supply equals potential real Gross Domestic Product (GDP).
• D) is very sensitive to changes in the price level.

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Definitions:

Mass Production

The manufacturing of large quantities of standardized products, often using assembly lines or automated technology, which benefits from economies of scale.

Suburbanization

The process by which populations move from urban areas to suburbs, often leading to the growth of residential areas on the outskirts of cities.

Farms

Land and the buildings on it, used for growing crops and/or raising animals as a primary source of income.

Protective Tariffs

Taxes imposed on imported goods to protect domestic industries from foreign competition by making imports more expensive.