The AD-AS Model Implies That,in the Long Run

question 8

Multiple Choice

The AD-AS model implies that,in the long run,

• A) the economy adjusts very quickly to demand shocks
• B) changes in government spending have no effect on GDP
• C) the price level never changes
• D) a mixture of fiscal and monetary policy is necessary to achieve full employment
• E) the Fed controls output

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Definitions:

Ras Proteins

A group of small G proteins, named by their discovery in rat sarcoma cancer cells; important in many signaling pathways.

Cyclic Adenosine

A cyclic form of adenosine monophosphate important in intracellular signaling processes.

Serotonin

A neurotransmitter of the biogenic amine group; important in mood and helps regulate the sleep–wake cycle.

Dopamine

A neurotransmitter of the biogenic amine group; important in motor function.