Suppose the Economy Is Initially in Long-Run Equilibrium

question 27

Multiple Choice

Suppose the economy is initially in long-run equilibrium. Then suppose there is a drought that destroys much of the wheat crop. According to the model of aggregate demand and aggregate supply, what happens to prices and output in the short run?

• A) Prices rise; output falls.
• B) Prices fall; output rises.
• C) Prices rise; output rises.
• D) Prices fall; output falls.

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The action of taking charge, performing tasks, or making decisions independently without needing direct instructions or supervision.

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Describes an individual who has a strong belief in their own abilities, skills, and judgment.

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Failing to recognize or utilize the abilities, skills, or talents that individuals or situations possess, often leading to missed opportunities for growth or improvement.

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