Why does the slope of the aggregate supply curve change from the short run to the long run?
What will be an ideal response?
In the short run, the aggregate supply curve is upward-sloping because rising prices cause profits to increase, and this induces producers to supply more output. In the long run, costs begin to rise along with the rising prices, and the profit incentive no longer exists. As a result, the long-run aggregate supply curve is vertical at the full-employment level of output.
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When the anticipated rate of inflation is 5 percent and the real rate of interest is 4 percent, the nominal rate of interest is
A) 1 percent. B) 4 percent. C) 5 percent. D) 9 percent.
In a market based firm
A) headquarters is really only interested in external business relationships. B) headquarters still needs total budget control. C) headquarters assigns property rights. D) a focus on manufacturing is appropriate.