Use the Following to Answer Questions

question 25

Multiple Choice

Use the following to answer questions .
Exhibit: Short-run Aggregate Supply
-(Exhibit: Short-run Aggregate Supply) Suppose that the economy is in long-run equilibrium at point A. Now suppose the stock market crashes, significantly reducing household wealth. What happens in the long-run, all other things unchanged?

• A) The aggregate demand curve will shift back to AD₁.
• B) The economy will be stuck at an output level below its potential level.
• C) The economy returns to full-employment equilibrium at point A.
• D) The economy returns to full-employment equilibrium at point D.

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Definitions:

Independent Practice Association

An organization of independent physicians, or other healthcare providers, that contracts with health plans or directly with patients to provide care within negotiated price and service constraints.

HMO

Health Maintenance Organization, a type of health insurance plan that requires members to receive healthcare services from a network of designated providers.

Providers

Entities or individuals that supply services or goods.

Medicare

A federal health insurance program in the United States for people aged 65 and older, and for some younger people with disabilities.