With a Cost Shock, a Small Decrease in Output Relative

question 59

Multiple Choice

With a cost shock, a small decrease in output relative to the increase in the price level would occur if the ________ curve is relatively ________.

• A) AS; flat
• B) AS; steep
• C) AD; flat
• D) AD; steep

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Definitions:

Consumer Price Index

A measure of the average shift in costs for various consumer items and services bought by urban dwellers, the Consumer Price Index reveals how these prices change over time.

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy in a year.

Relief Sculpture

A type of sculpture that projects from the background surface, often creating an effect of depth while remaining attached to a solid background.

Atmospheric Effect

A technique in art, especially painting, where color and tone are used to depict the effect of atmosphere on objects in the distance, enhancing depth and realism.