A vertical line showing an economy's potential output is called the ________, while a horizontal line showing the current rate of inflation is called the ________.
A. short-run aggregate supply; long-run aggregate supply
B. long-run aggregate supply; short-run aggregate supply
C. long-run aggregate supply; aggregate demand
D. short-run aggregate supply; aggregate demand
Answer: B
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Ceteris paribus, a decrease in the government's budget deficit will increase domestic investment and net foreign investment
Indicate whether the statement is true or false
The perfectly competitive firm has no influence over price because
A. its output is so insignificant relative to the market as a whole. B. antitrust laws constrain perfectly competitive firms. C. consumers establish the prices of products. D. it doesn’t know its demand curve.
Absolute advantage is irrelevant, because knowing the absolute number of labor hours required to produce a good does not tell us if we can benefit from trade
a. True b. False Indicate whether the statement is true or false
The term opportunity cost refers to the
A. Amount of resources used to produce a good but not a service. B. The most desired good or service given up when something is obtained. C. Financial costs of all the factors of production used to produce a good or service. D. Value of every other good given up when a good or service is obtained.