In an Economy Where Nominal Incomes Adjust Equally to Changes

question 23

Multiple Choice

In an economy where nominal incomes adjust equally to changes in the price level, we would expect the long-run aggregate supply curve to be:

• A) vertical.
• B) horizontal.
• C) unit elastic.
• D) negatively sloped.
• E) positively sloped.

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Definitions:

Incentive to Work

refers to the factors or motivations that encourage individuals to engage in employment or increase their work effort.

On-The-Job Training

A method of learning skills and competencies required for a job through direct performance during work hours.

Negative Income Tax

A welfare system within which individuals earning below a certain amount receive supplemental pay from the government instead of paying taxes.

Income Distribution

Income distribution is the way in which total income is shared among the population of a country or region.