Question

An economy’s production limitations are a function of which of the following factors (choose all that apply): Group of answer choices consumer tastes and preferences institutional and market structures physical capital quantity of labor related goods technology 2.An increase in demand can overcome production constraints. Group of answer choices True False 3. The horizontal axis on the AD/AS model is (choose all that apply): Group of answer choices GDP the GDP Deflator price price level quantity real GDP 4. The vertical axis on an AD or AS model is (choose all that apply): Group of answer choices GDP GDP Deflator price price level quantity real GDP Increases in the price level of outputs lead to a _____ level of total spending; thus, the AD curve is: _____. Group of answer choices higher; upward-sloping lower; downward-sloping 5.

Answer 1

Answer 1:

physical capital quantity of labor. The production function of an economy is limited by the amount of physical capital and labor employed because these two factors determine the level of production in the economy.

Answer 2:

False. Increase in demand will increase price level and cannot overcome production constraints of the economy which depends on supply side factors of the economy.

Answer 3:

Real GDP.The horizontal Axis depicts the quantity of Real GDP in the economy.

Answer 4:

Price level. The vertical Axis in the AS AD framework denotes the price level in the economy.

Answer 5:

Increase in the price level of outputs leads to a lower level of total spending, Thus, the AD curve is downward sloping.