What is the difference between average variable costs and average total costs?
What will be an ideal response?
Average total costs equal average variable costs plus average fixed costs. Total fixed costs are constant and do not vary with output, so average fixed costs fall as output increases. For this reason, as output increases average variable and average total costs get closer together.
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The downward slope of the aggregate demand curve shows that
A) a higher price level will cause planned purchase rates for final goods and services to be higher. B) an increase in aggregate demand reduces the long-run aggregate supply. C) a lower price level will cause planned purchase rates for final goods and services to be higher. D) an increase in aggregate demand increases the long-run aggregate supply.
An inflationary gap will occur when
a. real GDP exceeds nominal GDP. b. nominal GDP exceeds real GDP. c. real GDP exceeds potential GDP. d. potential GDP exceeds real GDP