Suppose the Economy Is Initially in Long-Run Equilibrium

question 71

Multiple Choice

Suppose the economy is initially in long-run equilibrium. Now suppose oil prices rise sharply and at the same time, policymakers pursue expansionary monetary and fiscal policies. Which of the following will occur as a result of these two events, given that supply-side effects dominate demand-side effects?

• A) The price level will necessarily rise but the effect on output is indeterminate.
• B) Real GDP must necessarily fall but the effect on the price level is indeterminate.
• C) The price level and real GDP must rise.
• D) The price level must rise and real GDP must fall.

Grasp the cognitive developmental perspective on universal developmental processes.

Appreciate cultural differences in moral reasoning.

Understand the capability of adolescents for rational decision-making under ideal conditions.

Understand the influence of external experiences on adolescents' success during school transitions.

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Definitions:

Social Security Beneficiary

A person who receives benefits from the Social Security program, which typically includes retirees, disabled workers, and their families.

Workers Per Beneficiary

The ratio of active employees contributing to a system (like Social Security) to the number of recipients receiving benefits.

Privately Held Federal Debt

Debt owed by the federal government that is not owned by governmental entities but by private investors, firms, individuals, and foreign governments.

Benefit Payments

Money paid to individuals by the government or insurance schemes, as in the case of unemployment benefits, social security, or disability payments.