The Economy Is in Long-Run Equilibrium

question 22

Multiple Choice

The economy is in long-run equilibrium. Suppose that automatic teller machines become cheaper and more convenient to use, and as a result the demand for money falls. Other things being equal, what would we expect will happen to the price level and real GDP in the short and long run?

• A) In the short run, the price level and real GDP would rise, but in the long run they would both be unaffected.
• B) In the short run, the price level and real GDP would rise, but in the long run the price level would rise and real GDP would be unaffected.
• C) In the short run, the price level and real GDP would fall, but in the long run they would both be unaffected.
• D) In the short run, the price level and real GDP would fall, but in the long run the price level would fall and real GDP would be unaffected.

---

Definitions:

World's Oldest Shoe

An archaeological find that represents the earliest known footwear, dating back to around 5500 B.C., discovered in the Areni-1 cave in Armenia.

Armenia

A landlocked country located in the South Caucasus region of Eurasia, known for its rich history, cultural heritage, and as one of the earliest Christian civilizations.

Wine

An alcoholic beverage made from fermented grapes or other fruits, varying greatly in flavor and style.

Breast-Feeding

The act of feeding a baby with milk directly from the mother's breast, providing essential nutrients and antibodies.