Which of the following is an assumption of the aggregate demand-aggregate supply model?
A)Capital stock cannot be varied in the short run.
B)An economy is always at full-employment level in the short run.
C)Producers are reluctant to change prices of their products even in the long run.
D)Long-run aggregate supply curve slopes upward.

Question

Quizplus · Accepted Answer

The aggregate demand-aggregate supply model assumes that in the short run, the capital stock is fixed, meaning it cannot be varied quickly. This is because investments in capital goods take time to plan, produce, and implement.

Which of the Following Is an Assumption of the Aggregate