Asked by Sarah Albertson on May 10, 2024
Verified
In the long run,the price level is determined by aggregate supply.
Aggregate Supply
The total supply of goods and services produced within an economy at a given overall price level and in a given time period.
Price Level
The average of current prices across the entire spectrum of goods and services produced in the economy, often used as a measure of inflation.
- Absorb the theory and effects of short-range and long-range aggregate supply curves.
Verified Answer
GM
Gavin MccreadyMay 15, 2024
Final Answer :
False
Explanation :
In the long run, the price level is primarily determined by the money supply and the velocity of money, according to the equation of exchange in monetarist theory. Aggregate supply determines the potential output, but the actual price level is more directly influenced by monetary factors.
Learning Objectives
- Absorb the theory and effects of short-range and long-range aggregate supply curves.
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