If the Short-Run Aggregate Supply Curve Is Horizontal, and Each

question 57

Multiple Choice

If the short-run aggregate supply curve is horizontal, and each member of the general public chooses to hold a larger fraction of his or her income as cash balances, then:

• A)output and employment will increase in the short run.
• B)output and employment will decrease in the short run.
• C)prices will increase in the short run.
• D)prices will decrease in the short run.

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Definitions:

Unconscious Mind

A part of the mind that is not in forefront awareness but influences thoughts, feelings, and behaviors.

Usual Awareness

The routine level of conscious knowledge or perception of the environment and one's own thoughts and feelings.

Dreaming

A series of thoughts, images, and sensations occurring in a person's mind during sleep, often associated with rapid eye movement (REM) sleep phases.

Neurosis

A broad category that includes a range of mental health issues characterized by emotional distress, anxiety, or depression, but without delusions or hallucinations, where coping mechanisms can still function.