The Aggregate Supply Curve in the Short Run Is Different

question 64

Multiple Choice

The aggregate supply curve in the short run is different from the aggregate supply curve in the long run because of:

• A) the existence of sticky prices in the short run.
• B) the crowding out effect.
• C) the recurring nature of supply shocks.
• D) the wealth effect.

---

Definitions:

Multiplier

In economics, a factor by which a change in spending results in a greater change in national income.

Fiscal Policy

Policies established by the government regarding taxes and expenditures designed to affect the economic environment.

Budget Deficit

The financial situation where a government's expenditures exceed its revenues, leading to borrowing or depletion of reserves.

National Debt

The overall monetary liabilities that a country's government has incurred by borrowing from diverse sources.