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.

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Definitions:

Variable Costing Income (VCI)

An accounting method that includes only variable costs—costs that change with production level—in calculating net income.

Full Costing Income (FCI)

A method of accounting that allocates all fixed and variable costs to products, operations or projects to determine profitability.

Consolidated Accounts

Financial statements that represent the combined financial activities of a parent company and its subsidiaries.

Absorption Costing

A costing approach that encompasses all costs associated with production, namely direct materials, direct labor, and both variable and fixed overheads, in the product's final cost.