If the Short-Run Aggregate Supply Curve Is Horizontal and the Long-Run

question 28

Multiple Choice

If the short-run aggregate supply curve is horizontal and the long-run aggregate supply curve is vertical, then a change in the money supply will change ______ in the short run and change ______ in the long run.

• A) only prices; only output
• B) only output; only prices
• C) both prices and output; only prices
• D) both prices and output; both prices and output

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Definitions:

Raw Materials

Basic substances in their natural, modified, or semi-processed states, used as inputs for manufacturing, constructing, or processing goods and products.

Cheap Labor

Workforce available for employment at very low wages, often exploited by employers to minimize production costs.

Global Inequality

Refers to differences in the economic ranking of countries.

Industrialization

The process of economic and social transformation that converts agrarian societies into industrial ones.