The Vertical Long-Run Phillips Curve Occurs in the Long Run

question 65

Multiple Choice

The vertical long-run Phillips curve occurs in the long run because

• A) the aggregate supply curve is vertical which means that changes in aggregate demand will not change unemployment.
• B) wage and price rigidities prevent changes in aggregate demand to change unemployment.
• C) economic agents are quick to respond to changes in the price level.
• D) of lags in monetary and fiscal policies.

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Definitions:

Rent Controls

Government-imposed limits on the amount landlords can charge for leasing property, aimed at making housing more affordable for renters.

Rental Homes

Properties that owners lease to tenants for a predetermined rent and period.

Support Price

A price level set by the government or a regulatory body to ensure that producers receive a minimum price for their products.

Price Elasticities

Measures how responsive the quantity demanded or supplied of a good is to a change in its price, indicating its sensitivity.