The Horizontal Shape of the Immediate Short Run Aggregate Supply

question 47

Multiple Choice

The horizontal shape of the immediate short run aggregate supply implies that:

• A)the total amount of output in the economy depends only on the general price level.
• B)the total amount of output in the economy depends only on the volume of spending.
• C)the total amount of output in the economy is fixed.
• D)the total amount of spending depends on the price of inputs.

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Definitions:

Holding Costs

Expenses related to keeping inventory on hand.

Stocking Costs

Expenses related to holding or storing inventory, including warehousing, handling, insurance, and spoilage costs.

Ordering Costs

Expenses related to procuring inventory.

Shipping Costs

Expenses associated with the transportation of goods from the seller to the buyer, which can include packaging, postage, and handling fees.