Starting from Short-Run Equilibrium,the Following Occurs: Individuals Expect Higher (Future)incomes

question 33

Multiple Choice

Starting from short-run equilibrium,the following occurs: individuals expect higher (future) incomes and wage rates rise.What is the effect on the price level and Real GDP in the short run?

• A) The price level rises and Real GDP rises.
• B) The price level falls and Real GDP falls.
• C) The price level rises,but the effect on Real GDP cannot be determined.
• D) Real GDP rises,but the effect on the price level cannot be determined.
• E) Real GDP falls,but the effect on the price level cannot be determined.

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Definitions:

Individuality Corollary

A concept suggesting that individuals perceive events and entities in a unique manner based on their personal construct system.

Corollary

A proposition that follows from one already proven, a natural consequence or result.

Poles

In psychology, it can refer to the extremes of a personality dimension or trait, such as introversion/extroversion, where individuals can be positioned along a continuum.

Bandura

An influential psychologist known for his work on social learning theory, later called social cognitive theory.