Explain why the following statements are false. a. 'The AD curve slopes downwards because it is the
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Question:
Explain why the following statements are false.
a. 'The AD curve slopes downwards because it is the horizontal sum of the demand curves for individual goods.' [5 marks]
b. 'The LRAS curve is vertical because economic forces do not affect LRAS.' [5 marks]
c. 'If firms adjusted their prices every day, then the SRAS curve would be horizontal.' [5 marks]
d. 'Whenever the economy enters a recession, its LRAS curve shifts to the left.'
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