The Quantity of Real GDP Supplied Decreases If the Price

question 304

Multiple Choice

The quantity of real GDP supplied decreases if the price level ________ because it ________ profits.

• A)rises;increases
• B)rises;decreases
• C)falls;increases
• D)falls;decreases
• E)None of the above answers is correct because the AS curve is vertical so that the quantity of real GDP supplied does not change when the price level changes.

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Definitions:

Price Increase

A price increase refers to a rise in the cost of goods or services, which can affect consumer demand and purchasing power.

CPI

This index, the Consumer Price Index, measures how the average prices of various consumer services and goods, including food, transportation, and healthcare, evolve using a weighted average technique.

Tooth Fairy

A mythical figure in Western cultures that exchanges lost baby teeth for a small payment when placed under a child's pillow.

CPI

A tool called the Consumer Price Index offers insight into the weighted average changes in prices for a selection of consumer-related goods and services, with a focus on sectors like transportation, food, and medical care.