Answer to Question #63563 in Macroeconomics for Yellen

Question

Mark correct statements about the short-run AS curve.

Select one or more:
a. The positively sloped (but not vertical) AS curve can be derived by assuming real rigidities on the labor market.
b. The positively sloped (but not vertical) AS curve can be derived by assuming nominal rigidities on the labor market.
c. Rational expectations imply a vertical AS curve.
d. Flexible prices on the labor and goods market imply an AS curve with a positive, but not vertical, slope.

Answer 1

The correct statements about the short-run AS curve are:
a. The positively sloped (but not vertical) AS curve can be derived by assuming real rigidities on the labor market.
d. Flexible prices on the labor and goods market imply an AS curve with a positive, but not vertical, slope.