Suppose the Economy Is Currently in Long-Run Equilibrium with Real

question 111

Multiple Choice

Suppose the economy is currently in long-run equilibrium with real GDP equal to potential GDP.A positive demand shock,that is not validated by the Bank of Canada,will eventually result in

• A)no change in the price level.
• B)an ongoing inflation in the economy.
• C)a lower price level and real GDP below potential output.
• D)a higher price level and GDP at potential output.
• E)an ongoing deflation in the economy.

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Definitions:

Seismic Reflection Survey

A geophysical method for exploring Earth's subsurface by sending seismic waves and analyzing the reflected signals from subsurface structures.

Magnetic Survey

A geophysical method for mapping variations in the Earth's magnetic field, often used in mineral exploration.

Gravity Survey

A geophysical method for measuring variations in the Earth's gravitational field, which can indicate differences in the distribution of densities and hence the structure of the subsurface.

Plate Boundaries

The edges where two or more of Earth's tectonic plates meet, often associated with seismic and volcanic activities.