If the economy is initially at long-run equilibrium and aggregate demand expands, then in the long run the price level
a) and output are lower than in the original long-run equilibrium.
b) is higher and output is the same as the original long-run equilibrium.
c) and output are higher than in the original long-run equilibrium.
d) is the same and output is lower than in the original long-run equilibrium.
Ans: b) is higher and output is the same as the original long-run equilibrium.
You might also like to view...
If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDP, then
a. the multiplier is 0.125. b. the multiplier is 3.5. c. the multiplier is 8. d. the multiplier is 50.
Differentiate between a patent and a copyright
What will be an ideal response?
GDP counts only final goods and services because this
A) method avoids including any goods that are produced this year and sold next year. B) method avoids double counting of goods going through several stages of production. C) amount can be more easily determined in the marketplace. D) method avoids understating the value of GDP produced during a given year.
Which of the following was not a cause of the Great Recession?
a. Deregulating nationally chartered banks but not state-chartered banks. b.Government incentives to increase home ownership. c. Government encouragement of creative home-buying strategies. d. Relaxation of bank underwriting standards. e. All of the above were causes of the Great Recession.