Multiple Choice
Which of the following is NOT a limitation of the aggregate demand-inflation adjustment model?
A) LRAS is a thick line or band,not a thin vertical line.
B) LRAS bends backward at both very high and very low rates of inflation.
C) Potential output is not fixed.
D) Bank of Canada responses are more complex than illustrated in this model.
E) Firms do not change prices in response to output gaps.
Correct Answer:
Verified
Correct Answer:
Verified
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