The Initial Aggregate Demand Curve Is AD₁ and the Initial

question 15

Multiple Choice

The initial aggregate demand curve is AD₁ and the initial aggregate supply curve is AS₁.In the long run,the aggregate supply curve is vertical in the diagram because:

• A) nominal wages and other input prices are assumed to be fixed.
• B) real output level Q_f is the potential level of output.
• C) price level increases produce perfectly offsetting changes in nominal wages and other input prices.
• D) higher than expected rates of actual inflation reduce real output only temporarily.

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Definitions:

Bailment

Bailment describes the process of placing personal property into the temporary custody or care of another, with the expectation of its return.

Real Property

Land and anything permanently affixed to it, such as buildings and natural resources.

Personal Property

Items or assets that can be moved and are not fixed to one location, unlike real estate.

Accession

The act of acquiring additional property or improvements to existing property, which becomes an integral part of the original property.