In the IS-LM model, the implicit assumption made about aggregate supply was that the (A) aggregate supply schedule was vertical because prices were flexible. (B) aggregate supply schedule was horizontal because prices were fixed. (C) aggregate supply schedule was upward sloping to the right because wages and prices were fixed. (D) supply of output was fixed.

UoH 2010 Question 53: IS-LM model

In the IS-LM model, the implicit assumption made about aggregate supply was that the

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IS-LM model has come up 137 times in 7 exams since 2004.

This question is on Extensions: expected inflation, endogenous money and rate targeting, part of IS-LM model in Macroeconomics.

Variations on the basic model: inflation expectations, money supply that responds, and central banks that target the rate.

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