Consider the Basic AD/AS Macro Model in Long-Run Equilibrium

question 145

Multiple Choice

Consider the basic AD/AS macro model in long-run equilibrium.A permanent expansionary AD shock has ________ price-level effect in the short run and ________ price-level effect in the long run.

• A)a positive; no
• B)a negative; no
• C)a positive; an even larger
• D)a positive; a smaller
• E)a negative; a positive

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Definitions:

Graph

A plot that illustrates the relationship between two or more variables, typically used in mathematics to display functions or data sets.

Vertices

Points where two or more curves, lines, or edges meet; in geometry, it is the corner points of polygons and polyhedra.

Ellipse

A set of points in a plane such that the sum of the distances from two fixed points (foci) to any point on the ellipse is constant.

Center

The middle point of a geometric figure, which is equidistant from all boundary points in the case of a circle or sphere.