If the Aggregate Supply Curve Is Flat

question 161

Multiple Choice

If the aggregate supply curve is flat,

• A)expansionary fiscal or monetary policy will cause a good deal of inflation with little increase in real output.
• B)expansionary fiscal or monetary policy will buy large gains in real output at low cost in terms of inflation.
• C)a contractionary stabilization policy is an effective way to reduce inflation.
• D)decreasing the income tax will not shift aggregate demand.

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Definitions:

Dual-Center Theory

The hypothesis that one area in the lateral hypothalamus is the “on” center, the initiator of eating, while another area in the ventromedial hypothalamus is the “off” center, the terminator of eating. Current evidence indicates that although these brain regions are crucial for eating, the regulation of eating also involves other circuits.

Lateral Region

An area situated at the side of an organ or structure within the body.

Hypothalamus

A small but crucial part of the brain's limbic system, involved in many functions, including hormone regulation, temperature control, and management of hunger and thirst.

Leptin

a hormone produced by fat cells that helps to regulate energy balance by inhibiting hunger.