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

question 53

Multiple Choice

Consider the basic AD/AS macro model in long-run equilibrium.A negative AS shock will ________ the price level and ________ output in the short run.In the long run,the price level will ________ and output ________.

• A)decrease; decrease; decrease further; will decrease further
• B)decrease; decrease; decrease further; will be restored to potential output
• C)increase; decrease; decrease; will be restored to potential output
• D)increase; decrease; increase further; will be restored to potential output
• E)increase; increase; increase further; will be restored to potential output

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Definitions:

Optimistic Future

A hopeful outlook towards future events, believing in positive outcomes.

Sincere

Sincere describes a quality of being genuine, honest, and free from pretense or deceit in one's actions or expressions.

Uncertain Conclusions

Outcomes or findings that are not definitive or clear, often due to insufficient evidence or complexity.

Negative News

Reports or announcements that convey adverse or unwelcome information, often impacting public perception or sentiment.