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:

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial asset at a predetermined price at a specific time in the future.

Clearinghouse

Established by exchanges to facilitate transfer of securities resulting from trades. For options and futures contracts, the clearinghouse may interpose itself as a middleman between two traders.

Taxation

The process whereby authorities impose financial charges on individuals or legal entities, which can have implications for investment decisions.

Futures Trading

Involves buying and selling futures contracts which are agreements to buy or sell an asset at a future date for a price that is decided now.