The Economy Is in Long-Run Equilibrium When There Is an Incorrectly

question 63

Multiple Choice

The economy is in long-run equilibrium when there is an incorrectly anticipated increase in aggregate demand brought about by expansionary monetary policy.Specifically,aggregate demand increases by more than people anticipate (bias downward) .According to new classical theory,the price level will __________ and Real GDP will __________ in the short run.In the long run,the price level will be __________ than it was before aggregate demand increased.

• A) rise; fall; higher
• B) rise; rise; higher
• C) fall; rise; lower
• D) fall; rise; higher
• E) rise; rise; lower

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Definitions:

Corporate Financing

The process of providing funds for business activities, making investments, and managing financial risks.

Conditional Sales Agreement

A contract agreement where the sale of goods is conditional upon certain terms, with the ownership title remaining with the seller until those conditions are met.

Chattel Mortgage

A legal arrangement where personal property is used as security for a loan, but the borrower maintains possession of the property while repaying the loan.

Principal Differences

Fundamental disagreements or conflicting main ideas, often found in negotiations, viewpoints, or interpretations.