Consider the AD/AS Model

question 98

Multiple Choice

Consider the AD/AS model.Since output in the long run is determined by Y^*,the only role of the AD curve is to determine the price level.This is true because

• A)Y^* is independent of the price level.
• B)the aggregate demand curve is vertical.
• C)the aggregate demand curve is horizontal.
• D)Y^* depends on the price level.
• E)the AS curve is upward sloping.

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Definitions:

Setups

The preparation and adjustments made to machinery or equipment before a production run or the execution of a particular job.

Economic Order Quantity

A calculation used to determine the most efficient order size that minimizes the sum of ordering and holding costs associated with inventory management.

Holding Costs

Expenses associated with storing inventory, including warehouse storage fees, insurance, and spoilage costs, until the inventory is sold or used.

Purchase Price

The amount of money required to acquire a good or service.