If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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Which of the following is the most important advantage of using money rather than relying exclusively on barter?
A) The use of money encourages people to diversify and learn to do more things for themselves. B) The use of money encourages people who want to exchange to become more closely acquainted. C) The use of money lowers the cost of locating people with whom to exchange. D) The use of money reduces opportunities for fraud and theft. E) The use of money reduces selfishness because money in itself has no value.
Which of the following is not an example of market failure?
a. Extreme income inequality b. Externalities c. Efficient equilibrium d. Lack of competition
When the money market is drawn with the value of money on the vertical axis,
a. money demand slopes upward and money supply is horizontal. b. money demand slopes downward and money supply is horizontal. c. money demand slopes upward and money supply is vertical. d. money demand slopes downward and money supply is vertical.
The largest expenditure component of U.S. GDP is:
A. consumption. B. investment. C. exports. D. government purchases.