Suppose the Economy Is Initially in Long-Run Equilibrium

question 132

Multiple Choice

Suppose the economy is initially in long-run equilibrium. Which of the following events leads to an increase in the price level and real GDP in the short run?

• A) A decrease in health insurance premiums paid by firms raises the cost of employing labor
• B) An increase in government transfer payments
• C) An increase in the cost of a key input such as oil
• D) A sharp fall in stock market prices

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Definitions:

Exported Goods

Items that are sent from one country to another for the purpose of trade or sale.

Sovereign Immunity

The legal doctrine that prevents the government or its subdivisions, departments, and agencies from being sued without its consent.

Foreign Sovereign Immunities Act

A U.S. law that limits the circumstances under which a foreign sovereign nation (its political subdivisions, agencies, and instrumentalities) can be sued in U.S. courts.

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Organized and arranged into a systematic code or system, often referring to laws and regulations.