If There Was No Profit Effect or Misperception Effect in the Short

question 147

Multiple Choice

If there was no profit effect or misperception effect in the short run,how would the SRAS and LRAS curve be drawn?

• A)The SRAS and the LRAS would both be vertical.
• B)The SRAS would be vertical and the LRAS would be upward sloping.
• C)The SRAS would be upward sloping and the LRAS would be vertical.
• D)The SRAS and LRAS would both be upward sloping.

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Definitions:

Expected Value

The mathematical average of all possible outcomes of a random variable, weighted by their respective probabilities.

Stocks

Shares of ownership in a company, which represent a claim on the company's earnings and assets.

Investment

Applying resources, typically financial, in order to gain income or profit.

Portfolio

An aggregation of financial instruments such as company shares, debt securities, tangible commodities, available cash, and cash-like resources, including mutual funds and ETFs.