The Long-Run Aggregate Supply Curve Is

question 49

Multiple Choice

The long-run aggregate supply curve is

• A) vertical because full-employment output is independent of the price level.
• B) upward sloping because the economy grows over time.
• C) horizontal because full-employment output is independent of the price level.
• D) upward sloping because as the price level rises,firms will increase output.
• E) downward sloping because rising prices reduce real wealth and spending.

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Definitions:

Maturity

The date on which the principal amount of a loan, bond, or other financial instrument becomes due and is repaid to the investor.

Interest Rate

The cost of borrowing money or the return earned on an investment, usually expressed as a percentage of the principal.

Equity Financing

The method of raising capital through the sale of shares in a company, which gives shareholders ownership rights.

Shareholders

Individuals or entities that own shares in a corporation, giving them a part of the ownership of the company and potentially a claim on part of its assets and earnings.