The Long-Run Aggregate Supply Curve Is Vertical at $100 Billion

question 79

Multiple Choice

The long-run aggregate supply curve is vertical at $100 billion, but the short-run aggregate supply curve intersects the aggregate demand curve at $120 billion. From this, we know that

• A) the economy is operating below full capacity in the short run, and will have to adjust by hiring more workers, thus reducing unemployment.
• B) the price level is too high. The only way long-run equilibrium can be restored is to lower the price level.
• C) adjustments will have to occur so that the long-run aggregate supply equals $120 billion.
• D) adjustments will have to occur so that the short-run aggregate supply intersects the aggregate demand curve at $100 billion.

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Definitions:

Terminal Response

In the context of psychology, this refers to the final behavior or action that occurs at the end of a behavioral sequence, often in response to conditioning or therapy.

Approximation

A technique in mathematics and statistics used to find close but not exact answers, or a process in behaviorism to successively refine behaviors towards a target.

Behavior Therapy

A therapy based on the principles of behaviorism, focusing on modifying problematic behaviors and learning new coping mechanisms.

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome, often reflecting a reaction to stress.