If the Short-Run Aggregate Supply Curve Is Assumed to Be

question 12

Multiple Choice

If the short-run aggregate supply curve is assumed to be horizontal and international capital flows are infinitely elastic,then the big,comprehensive model corresponds to which of the following special cases?

• A) classical closed economy
• B) aggregate demand and aggregate supply
• C) IS-LM model
• D) Mundell-Fleming with floating exchange rate

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Definitions:

Statement of Cash Flows

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

Indirect Method

A cash flow statement approach that adjusts net income for changes in balance sheet accounts to convert it from an accrual basis to a cash basis.

Net Income

The amount of profit that remains after all operating expenses, taxes, and costs have been subtracted from total revenue.

Net Cash

Net cash refers to the amount of cash that remains after subtracting a company's total cash outflows from its total cash inflows, indicating the company's liquidity position.