In the AD-AS Model, When the Short-Run Aggregate Supply (SAS)

question 47

Multiple Choice

In the AD-AS model, when the short-run aggregate supply (SAS) curve is horizontal, it means that

• A) in the short run, aggregate supply is equal to the aggregate demand.
• B) in the short run, producers produce whatever quantity is demanded.
• C) in the short run, output is fixed.
• D) in the short run, price will rise as output increases.

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Definitions:

Prepaid Rent

Payments made in advance for rent on a property or space that is to be used in the future, recorded as an asset on the balance sheet until the period to which the payment applies passes.

Sales Revenue

The total income a company generates from selling its goods or services before any costs or expenses are subtracted.

Wage Expense

The total amount spent by a business on salaries and wages for its employees.

Post-Closing Trial Balance

A list of all accounts and their balances after closing entries are made, showing only balance sheet accounts.