When the AS Curve Is Vertical,fiscal Policy Will Be

question 85

Multiple Choice

When the AS curve is vertical,fiscal policy will be

• A)Ineffective against both inflation and unemployment.
• B)Effective against inflation but not unemployment.
• C)Effective against unemployment but not inflation.
• D)Effective against both inflation and unemployment.

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Definitions:

Law of Diminishing Returns

A principle stating that as one factor of production is increased while others are held constant, there comes a point at which the marginal gain in output begins to decrease.

Long Run

A period in which all factors of production and costs are variable, allowing for complete adjustment to changes.

Commercial Aircraft

Airplanes designed specifically for carrying passengers and/or cargo for commercial airlines.

Ready-Mix Concrete

Concrete that is manufactured in a factory or batching plant, according to a set recipe, and then delivered to a worksite by truck mounted in–transit mixers.