The term opportunity cost refers to the
a. value of what is gained when a choice is made.
b. difference between the value of what is gained and the value of what is forgone when a choice is made.
c. value of what is forgone when a choice is made.
d. direct costs involved in making a choice.
c
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Use the figure above to answer this question. At a price level of 110
A) real GDP is greater than the aggregate quantity demanded and firms will cut production. B) real GDP is less than the aggregate quantity demanded and firms will increase production. C) inventories will decrease. D) real GDP less than the aggregate quantity demanded and firms will increase prices.
Which of the following is true?
a. Inflation and unemployment rates can both increase in the short run in response to negative supply shocks. b. Inflation and unemployment rates cannot both decrease in the short run in response to reduced aggregate demand. c. Inflation and unemployment rates can both decrease in the short run in response to positive supply shocks. d. All of the above are true.