Which of the following statements is TRUE about the long-run and short-run aggregate supply curve in the classical model?
A) The long-run aggregate supply curve is vertical, and the short-run curve is horizontal.
B) The long-run aggregate supply curve is not defined, and the short run curve is vertical.
C) The long-run and short-run curves start out horizontal and eventually become vertical.
D) The long-run curve is vertical, and there is no short-run curve since all adjustments occur quickly.
D
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The multiplier-accelerator model
A) suggests that a downturn in real GDP will lead to a sharp fall in investment, which leads to further reductions in GDP through the multiplier. B) emphasizes that current investment spending depends negatively on the expected future growth of GDP. C) links investment spending to stock prices. D) emphasizes the role of real interest rates and taxes.
Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. How many hours will be purchased and what is her total revenue?
A) 5 hours; total revenue = $35 B) 4 hours; total revenue = $28 C) 3 hours; total revenue = $21 D) 2 hours; total revenue = $14