Which of the following statements is true?
A) The long-run aggregate supply (LRAS) curve shows the Real GDP the economy is prepared to supply at different price levels, assuming wage rates and all other resource prices have fully adjusted to eliminate a recessionary or inflationary gap.
B) Laissez-faire is a government policy of raising aggregate demand in order to eliminate a recessionary gap.
C) An economy can operate beyond its physical PPF, but not beyond its institutional PPF.
D) If the economy is self-regulating, it is always in long-run equilibrium.
E) a and c
A
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Figure 42.2
A. zero. B. the smaller of the dashed-line boxes. C. between the size of the two dashed-line boxes. D. the larger of the dashed-line boxes.
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According to the traditional classical school of thought, aggregate supply is vertical both in the short run and in the long run
a. True b. False Indicate whether the statement is true or false