Of the Following Theories, Which Is Consistent with a Vertical

question 117

Multiple Choice

Of the following theories, which is consistent with a vertical long-run aggregate supply curve?

• A) the sticky-wage theory
• B) misperceptions theory
• C) both the sticky-wage and misperceptions theories.
• D) neither the sticky-wage nor the misperceptions theory.

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Definitions:

Investments

Assets or items acquired with the goal of generating income or appreciation over time.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan balance.

Non-interest Bearing

A financial term indicating a debt or deposit that does not accrue interest over time, identical in concept to its prior mention but explained with different wording.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, compounding the amount on which future interest is calculated.