The Long-Run Aggregate Supply Curve

question 139

Multiple Choice

The long-run aggregate supply curve

• A) shifts to the right when there is a tax increase.
• B) indicates the level of output (GDP) that occurs when resources are fully employed.
• C) indicates that an increase in the overall price level will cause an increase in production.
• D) shifts to the right when the Federal Reserve increases the money supply.

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Definitions:

Command Economy

An economic system where the government or a central authority makes all decisions regarding the production and distribution of goods and services.

Market Economy

An economic system in which supply and demand from consumers primarily control the production and distribution of goods and services.

Medium of Exchange

Any item sellers generally accept and buyers generally use to pay for a good or service; money; a convenient means of exchanging goods and services without engaging in barter.

Coincidence of Wants

A situation in barter economies where two parties each possess goods or services that the other desires, enabling a direct exchange without the need for a common medium of trade.