If the Economy's AS Curve Is Completely Horizontal,the Multiplier in the AD/AS

question 128

Multiple Choice

If the economy's AS curve is completely horizontal,the multiplier in the AD/AS model is

• A)infinitely large.
• B)equal to the simple multiplier.
• C)smaller than the simple multiplier.
• D)is zero.
• E)negative.

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Definitions:

Interdependence

Interdependence is a condition where entities are mutually reliant on each other, implying that actions of one can significantly impact the others.

Businesses

Economic entities (firms) that purchase resources and provide goods and services to the economy.

Product Markets

Markets where goods and services are bought and sold, connecting buyers and sellers.

Households

Economic units consisting of all individuals living in a single residence, making decisions about consumption, savings, and investment.