The Long-Run Aggregate Supply Curve Is Vertical at $18 Trillion

question 38

Multiple Choice

The long-run aggregate supply curve is vertical at $18 trillion but the short-run aggregate supply curve intersects the aggregate demand curve at $19 trillion. We know that

• A) the economy is producing below full employment in the short run, and will adjust by hiring more workers, thus decreasing unemployment.
• B) the price level is too high. The long-run equilibrium will occur with a lower price level.
• C) adjustments will occur so that the long-run aggregate supply equals $19 trillion.
• D) adjustments will occur so that the short-run aggregate supply eventually intersects the aggregate demand curve at $16 trillion.

Understand and apply cost concepts including variable, fixed, marginal, average, average variable, and average fixed costs.

Analyze the relationship between marginal cost and various average costs (total, variable, fixed) in cost behavior.

Interpret cost curves, including their shapes, shifts, and the relationships among them in both short and long runs.

Calculate economic cost, including opportunity costs and sunk costs, in decision making.

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Definitions:

Potential Investors

Individuals or entities that are considering investing capital in a particular project or company but have not yet made a commitment.

Private Debt

Private debt refers to loans or debt financing that is not issued or traded in the public markets, typically provided by private lenders.

Venture Capital

Funding provided by investors to startups and small businesses that have a high potential for long-term growth.

Funding Stages

The various phases of financial support provided to startups and businesses, which typically progress from seed funding to later-stage investments.