If the AD Curve Intersects the Short-Run Aggregate Supply Curve

question 4

Multiple Choice

If the AD curve intersects the short-run aggregate supply curve to the left of the long-run aggregate supply curve, under flexible exchange rates, then the long-run equilibrium position

• A) can be attained if labor adjusts its wages downward due to prices being lower than Expected.
• B) can be attained by a decrease in government spending.
• C) can be attained by contracting the money supply.
• D) cannot be attained without a change in technology.

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Definitions:

Business Consultant

A professional who provides expert or professional advice in a particular area of expertise, such as business, to help organizations improve performance.

Monopsonist

A market condition where there is only one buyer for a product or service, giving them significant power over prices.

Labor Union

An organization representing workers' interests in negotiations with employers over wages, benefits, working conditions, and other employment terms.

Supply of Labor

The total hours that workers are willing and able to work at a given wage rate, within a given period.