The Assumption That Prices and Wages Are Flexible Implies That

question 33

Multiple Choice

The assumption that prices and wages are flexible implies that the:

• A)Short-run aggregate supply curve is irrelevant
• B)Short-run aggregate supply curve shifts slowly in response to deviations of current output from potential output
• C)Long-run aggregate supply curve is irrelevant
• D)Long-run aggregate supply curve could not shift

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Definitions:

OPEC Nations

Member countries of the Organization of the Petroleum Exporting Countries, a group that coordinates the petroleum policies of its members to secure fair and stable prices for petroleum producers.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good suppliers are willing to sell.

Mass Transit

Public transportation systems that move large numbers of people within urban and suburban areas.

Price of Gasoline

The cost per unit volume of gasoline, typically measured in dollars per gallon or liters.