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:

Useful Information

Information that is relevant and beneficial for decision-making processes.

Controller's Staff

Individuals who work under the direction of a controller, handling accounting functions such as financial reporting, budgeting, and audit facilitation.

Management Accountants

Professionals who specialize in providing financial data and analysis to managers within organizations to make informed business decisions.

Cost Accounting

The method of accounting that focuses on capturing a company's total cost of production by assessing its variable and fixed costs.