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If the Coefficient a in the New Classical Expression for Short-Run

Question 26

Multiple Choice

If the coefficient a in the new classical expression for short-run aggregate supply were equal to zero,


A) aggregate output would always be at its full-employment level.
B) the short-run aggregate supply curve would slope down.
C) the short-run aggregate supply curve would be a horizontal line.
D) aggregate output would only differ from its full-employment level if the actual price level did not equal the expected price level.

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