If the Short-Run Aggregate Supply Curve Is Assumed to Be

question 73

Multiple Choice

If the short-run aggregate supply curve is assumed to be horizontal and there are no international capital flows, then the big, comprehensive model in the appendix to Chapter 14 corresponds to which of the following special cases?

• A)classical closed economy
• B)aggregate demand and aggregate supply
• C)IS-LM model
• D)Mundell-Fleming model with floating exchange rate

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Definitions:

Merchandise

Goods bought and sold by a business in the ordinary course of its trading activity.

Credit

An accounting entry that increases liabilities or equity or decreases assets, or an arrangement to receive cash, goods, or services now and pay for them in the future.

Credit Sales

Transactions where goods or services are sold to a customer with an agreement to pay at a later date.

Cash Collection

The process of receiving and processing payments from customers.