When the Long-Run Aggregate Supply Curve Is Drawn as a Vertical

question 70

Multiple Choice

When the long-run aggregate supply curve is drawn as a vertical line, the theorist is assuming that

• A) the economy tends to move toward full employment in the long run.
• B) the economy tends to produce stable prices in the long run.
• C) the economy is stagnating at a low level of growth.
• D) shifting aggregate demand can change the level of employment in the long run.

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Definitions:

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds, a critical component in lease accounting.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial position at a specific point in time, showing assets, liabilities, and shareholder equity.

Liability

A financial obligation or debt owed by a company to others, often categorized as current or long-term.