The "Long-Run Aggregate Supply Curve," Vertical at Y^*,shows That

question 7

Multiple Choice

The "long-run aggregate supply curve," vertical at Y^*,shows that

• A)potential output will rise as prices rise.
• B)potential output will fall as prices rise.
• C)potential output is compatible with any price level.
• D)potential output is compatible with one particular price level.
• E)prices will always rise in the long run.

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Definitions:

Dividend Payment

A disbursement of a portion of a company's earnings decided by the board of directors to its shareholders.

Residual Dividend Policy

A strategy where dividends are paid to shareholders from the leftover or residual earnings after all operational and expansion costs are covered.

Target Capital Structure

The ideal mix of debt, preferred stock, and common equity that a company aims to hold to minimize its cost of capital.

Forecasted Net Income

An estimated calculation of a company's earnings after all expenses and taxes have been subtracted from revenue for a given future period.