Please help with review. 1. The long-run aggregate supply curve is influenced by
ID: 1195793 • Letter: P
Question
Please help with review.
1. The long-run aggregate supply curve is influenced by the price level.
Select one:
True
False
2. The opportunity cost of holding real money balances is the:
Select one:
a. interest rate.
b. price level.
c. all of the above.
d. none of the above.
3. Economic variables that generally turn down after a recession begins and turn back up after the recovery starts are called:
Select one:
a. leading indicators.
b. coincident indicators.
c. lagging indicators.
d. none of the above.
Explanation / Answer
In the long run the aggregate supply curve is a vertical straight line.That is supply is perfectly inelastic.This emplies that whatever be the price , supply would remain the same.Hence the long run supply doesnt depend on price.Thus the given statement is false.
The opportunity cost of holding real money balances is the interest rate.This is because its the interest rate that is forgone when one holds money.
Economic variables that turn down immediately in recession and turn up when recovery starts are called coincident indicators.Coincident indicators are the indicators which change according to the present situation.They do not indicate any future occurence of an event.