Which of the Following Is Correct

question 7

Multiple Choice

Which of the following is correct?

• A)The short-run,but not the long-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.
• B)The long-run,but not the short-run,aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.
• C)The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables.
• D)Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables.

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Definitions:

Federal Reserve

is the central banking system of the United States, responsible for managing the nation's monetary policy and overseeing its banking institutions.

Automatic Stabilizers

Programs such as unemployment insurance benefits and taxes that are already on the books to help alleviate recessions and hold down the rate of inflation.

Government Surplus

The situation where a government's revenue exceeds its expenditures during a given timeframe, indicating a positive fiscal balance.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulation of financial institutions, and stability of the financial system.