If the AD Curve Is Vertical, a Positive Cost Shock

question 15

Multiple Choice

If the AD curve is vertical, a positive cost shock will cause ________ in output and ________ in the price level.

• A) no change; no change
• B) a decrease; an increase
• C) no change; an increase
• D) a decrease; no change

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Definitions:

Flint, Michigan

A city in the United States known for its industrial history and a water crisis that exposed residents to lead-contaminated water.

City Life

The characteristics and daily experiences of living in densely populated urban areas, including the social, cultural, and economic facets.

Rural Areas

Locations characterized by low population density and large open spaces, often associated with farming or agriculture.

Suburban

Relating to or characteristic of a suburb, a residential area either existing as part of a city or urban area, or as a separate residential community within commuting distance of a city.