The dynamic aggregate supply curve is derived from which of the five equations of the model of aggregate demand and aggregate supply?
A) the Fisher equation and adaptive expectations
B) the Phillips curve and adaptive expectations
C) the monetary policy rule and the Fisher equation
D) the Phillips curve and the monetary policy rule

Question

Quizplus · Accepted Answer

The dynamic aggregate supply curve is derived from the Phillips curve and adaptive expectations, as it shows the relationship between unemployment and inflation over time. The other equations (Fisher equation, monetary policy rule) are related to the determination of the nominal interest rate and its effect on inflation and output in the short run.

The Dynamic Aggregate Supply Curve Is Derived from Which of the Five