The Inflation Adjustment Line Is Flat Because

question 183

Multiple Choice

The inflation adjustment line is flat because

• A)firms cannot change prices in the short run.
• B)prices are not responsive to changes in real GDP.
• C)the Fed cannot change monetary policy in the short run.
• D)prices are not responsive to changes in aggregate demand.
• E)firms adjust output first and price later.

---

Definitions:

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.

Homemade Leverage

The use of personal borrowing to adjust the overall level of financial leverage that an individual utilizes in their investments.

Capital Structure

Describes the mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, used to finance its overall operations and growth.