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

question 96

Multiple Choice

If the short-run aggregate supply curve is horizontal and the Fed increases the money supply, then:

• A) output and employment will increase in the short run.
• B) output and employment will decrease in the short run.
• C) prices will increase in the short run.
• D) prices will decrease in the short run.

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Definitions:

Months

Periods of time in the Gregorian calendar, each consisting of 28 to 31 days.

Size Constancy

A perceptual phenomenon where the perceived size of an object remains constant despite changes in its distance from the observer.

Bottom-Up Processing

An approach to information processing that starts with small, detailed data points to build up a comprehensive picture.

Retinal Image

A proximal stimulus for vision consisting of the projection of light waves reflected from stimuli and projected to a surface at the back of the eye.