If the Economy Is Operating on the Relatively Vertical Segment

question 135

Multiple Choice

If the economy is operating on the relatively vertical segment of the aggregate supply curve, an increase in aggregate demand causes a ________ change in the price level and a ________ change in output.

• A) small; small
• B) big; big
• C) big; small
• D) small; big

---

Definitions:

Desired Profit

The target earnings a company sets to achieve within a specific period through its operational activities.

Variable Cost Concept

Expenses that change in proportion to the amount of production or service operations.

Differential Analysis

A decision-making process that examines the differences in cost and revenue between different business alternatives to determine the most profitable option.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.