Suppose the Economy Is in Long-Run Equilibrium

question 220

Multiple Choice

Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, what would we expect will happen in the short run?

• A) Real GDP will rise, and the price level might rise, fall, or stay the same.
• B) Real GDP will fall, and the price level might rise, fall, or stay the same.
• C) The price level will rise, and real GDP might rise, fall, or stay the same.
• D) The price level will fall, and real GDP might rise, fall, or stay the same.

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Definitions:

Culture-Based Argument

A culture-based argument is a reasoning or persuasive technique that relies on cultural norms, values, beliefs, or practices to support a position or viewpoint.

Urban Underclass

A segment of society, often located in inner cities, that is trapped in a cycle of poverty and faces considerable social and economic disadvantages.

Assimilation Perspective

A view focusing on how minority groups gradually adopt the patterns and norms of a dominant culture, losing their original cultural identity.

Assimilation

A process by which a person or a group's language and, or culture come to resemble those of another group, often losing the original cultural identity.