Suppose the Economy Is Initially in a Long-Run Macroeconomic Equilibrium

question 121

Multiple Choice

Suppose the economy is initially in a long-run macroeconomic equilibrium.A shock then hits the economy and we observe that the unemployment rate increases and the price level decreases.We can conclude that ________ has decreased and there is now a(n) ________ gap.

• A)aggregate supply; inflationary
• B)aggregate demand; recessionary
• C)aggregate supply; recessionary
• D)aggregate demand; inflationary

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Definitions:

SCSI

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The graphical indicator on a computer screen that shows the user's mouse position and movement, often changing appearance based on context.

Jumping Around

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