If the Long-Run Aggregate Supply Curve Is Vertical, Then Changes

question 109

Multiple Choice

If the long-run aggregate supply curve is vertical, then changes in aggregate demand affect:

• A) neither prices nor level of output.
• B) both prices and level of output.
• C) level of output but not prices.
• D) prices but not level of output.

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Definitions:

Net Sales

Sales revenue minus returns, allowances, and discounts.

Cost Of Goods Sold

The direct costs attributable to the production of goods sold by a company, including material and labor costs.

Acid-Test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its quick assets, which exclude inventory.

Quick Ratio

A liquidity ratio that measures a company's ability to pay its short-term obligations with its most liquid assets.