When the Aggregate Supply and Aggregate Demand Model Is Drawn

question 54

Multiple Choice

When the aggregate supply and aggregate demand model is drawn to represent the Keynesian perspective, the short-run aggregate supply curve is:

• A) horizontal until it reaches the natural rate of output and then becomes vertical.
• B) vertical until it reaches the natural rate of output and then becomes horizontal.
• C) upward sloping when there is unemployment and downward sloping when at full employment.
• D) downward sloping when there is unemployment and upward sloping when at full employment.

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Definitions:

Accumulated Depreciation

The overall depreciation cost that has been allocated to a fixed asset over the span of its useful life.

Patent Rights

Legal protections granted to inventors, giving them exclusive rights to produce, use, and sell their inventions for a limited period.

Amortization

The process of spreading out a loan or an intangible asset's cost over its useful life.

Useful Life

The estimated period over which an asset is expected to be usable, providing economic benefits to its owner.