Consider an AD/AS Model in Long-Run Equilibrium

question 64

Multiple Choice

Consider an AD/AS model in long-run equilibrium.An output gap,caused by a leftward shift of the AD curve,will be eliminated if

• A)wages rise quickly.
• B)the AS curve shifts upward.
• C)wages and other factor prices fall sufficiently.
• D)real national income decreases.
• E)prices rise quickly.

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Definitions:

Cause and Effect

A relationship where one event (the cause) directly leads to the occurrence of another event (the effect).

Real Objects

In psychoanalytic theory, refers to tangible, physical objects as opposed to imagined or conceptual ones.

Reasoning

The method of using reason and logic to examine something to make a decision or verdict.

Dynamic Systems

Dynamic systems are systems characterized by constant change, activity, or progress, where interactions and relationships within the system can lead to varying outcomes over time.