In the AD-AS Model, Fiscal or Monetary Policy Cannot Affect

question 36

Multiple Choice

In the AD-AS model, fiscal or monetary policy cannot affect the level of output in

• A)the medium run and the long run
• B)the medium run and the short run
• C)the short run only
• D)the medium run only
• E)the long run only

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Definitions:

Slope

The measure of the steepness or incline of a line on a graph, indicating the rate at which variables change relative to each other.

Production Possibility Frontier

A graphical representation showing the maximum quantity of different goods that can be produced with a given set of resources and technology.

Opportunity Costs

The cost of an alternative that must be forgone in order to pursue a certain action or decision.

Production Possibility

An economic model that shows the maximum combination of goods or services that can be produced with a given set of resources.