Question
27. The short-run aggregate supply curve would be
vertical if
(A) nominal wages adjust immediately to
changes in the price level
(B) nominal wages adjust slowly when there is
unemployment
(C) both nominal wages and prices adjust
slowly to changes in aggregate demand
D
the spending multipli
+ 10
investment demand is very responsive
changes in interest rates
Answer
D - the short-run aggregate supply curve would be vertical if the spending multiplier is +10 and investment demand is very responsive to changes in interest rates.