Figure 7-6 -Refer to Figure 7-6. Suppose the Economy Is Initially at Is

question 159

Multiple Choice

Figure 7-6
-Refer to Figure 7-6. Suppose the economy is initially at A. Now suppose an increase in government purchases shifts the aggregate demand curve to AD₂. Which of the following is false about the economy after it adjusts to its new long-run equilibrium?

• A) Nominal wages increase.
• B) The price level rises to P_d.
• C) Firms employ more workers than in the short-run equilibrium.
• D) There is some frictional and structural unemployment.

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Definitions:

Equivalent Unit

A method used in process costing that converts partially completed units into a number of fully completed units.

Process Costing

A costing method used in industries where production is continuous, allocating costs to products based on the processes or departments they pass through.

FIFO Method

An inventory valuation method where the first items acquired are the first ones sold, standing for "First In, First Out."

Circuit Prep Department

A specific division within a manufacturing or processing facility focused on preparing components for assembly or processing circuits.