Which of the following is an assumption of the basis (static)aggregate demand and aggregate supply model?
A)Potential GDP increases continuously.
B)The economy does not experience continuing inflation.
C)The economy does not experience long-run growth.
D)The economy's aggregate demand curve shifts to the right in most periods.

Question

Quizplus · Accepted Answer

The basic (static) aggregate demand and aggregate supply model assumes that the economy does not experience long-run growth, focusing instead on short-term fluctuations. This model does not account for continuous increases in potential GDP, ongoing inflation, or consistent shifts in aggregate demand over time.

Which of the Following Is an Assumption of the Basis