The aggregate supply curve is vertical at the level of real GDP that corresponds to the natural rate of unemployment

We assume flexible prices in the long run, but whenever it is costly to change prices (menu costs) or when there are long-term contracts for labor or capital:

a. short-run prices tend to be flexible. b. short-run prices tend to be sticky. c. long-run prices tend to be sticky. d. firms have to pay higher costs and therefore have to raise prices.

An increase in net exports shifts the aggregate demand curve to the left.

a. true b. false