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In: Economics

Which of the following is correct?  The short-run, but not the long aggregate supply curve is consistent...



Which of the following is correct? 
 The short-run, but not the long aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.
 The long-run, but not the short-run, aggregate supply curve is consistent with the that nominal variables do not affect variables. 
 The long-run and short-run supply curves are consistent with the idea that nominal variables affect real variables.
 Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables.

Solutions

Expert Solution

Answer:- Which of the following is correct:-

Correct Answer:- The long-run, but not the short-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.

Reason:- The aggregate supply curve of long run is affected only by yhe capital labor and technology as this is the point at which the optimal utilization os all the variables are considered to be obtained. The long run supply curve is considered to be static in nature as there is very slight shift .

Rahul Sunny answered 2 years ago
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