If the Short-Run Aggregate Supply Curve Is Assumed to Be

question 7

Multiple Choice

If the short-run aggregate supply curve is assumed to be horizontal and money demand is proportional to income, then the mother of all models in the Appendix to Chapter 14 corresponds to which of the following special cases?

• A) classical closed economy
• B) aggregate demand and aggregate supply
• C) IS-LM model
• D) Mundell-Fleming model with floating exchange rate

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Definitions:

Institutions

Structures or mechanisms of social order and cooperation governing the behavior of a set of individuals within a given human colony.

Nursing Home

A residential facility for elderly or disabled people who require constant care and medical attention.

Opportunity

A favorable circumstance or chance that makes it possible to do or achieve something.

Residents

Individuals who live in a particular locality or housing, forming part of a community or population in that area.