The Long- Run Aggregate Supply Curve Is Vertical Because

question 46

Multiple Choice

The long- run aggregate supply curve is vertical because

• A)a vertical long- run aggregate supply curve indicates the maximum output rate that an economy can ever attain.
• B)a vertical long- run supply curve indicates that an increase in aggregate demand will lead to greater real GDP, but not greater nominal GDP.
• C)potential GDP never changes.
• D)actual output can never exceed, even temporarily, the quantity of output determined by the economy's long- run aggregate supply curve.
• E)potential GDP is independent of the price level.

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Definitions:

Negotiable

Capable of being transferred or modified in terms of agreement or ownership through endorsement or delivery.

On Demand

A service or product made available whenever requested by a customer, often implying immediate or quick delivery.

Acceleration Clause

A provision in a loan contract that allows the lender to demand immediate repayment of the entire loan amount if certain conditions are breached.

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.