If the Economy's AS Curve Is Completely Horizontal,the Multiplier in the AD/AS

question 128

Multiple Choice

If the economy's AS curve is completely horizontal,the multiplier in the AD/AS model is

• A)infinitely large.
• B)equal to the simple multiplier.
• C)smaller than the simple multiplier.
• D)is zero.
• E)negative.

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Definitions:

Production Function

A production function is a mathematical model that describes the relationship between inputs and the maximum output that can be produced with those inputs.

Supply Function

A mathematical relationship that depicts how the quantity of goods supplied by producers changes in response to different factors, such as price.

Factor Price

The price paid for the use of a factor of production, such as labor, land, or capital, in the production of goods and services.

Marginal Cost

Marginal cost refers to the increase in total cost resulting from producing one additional unit of a good or service.