Suppose the Economy Is in Long- Run Equilibrium When the Price

question 12

Multiple Choice

Suppose the economy is in long- run equilibrium when the price of oil rises.Which one of the following is not a short- run effect of this situation?

• A)an increase in the price level
• B)an increase in unemployment
• C)a decrease in short- run aggregate supply
• D)an increase in real GDP above long- run real GDP
• E)a decrease in consumer spending

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Definitions:

Return on Total Assets

A financial ratio that measures a company's profitability in relation to its total assets, indicating how effectively a company uses its assets to generate earnings.

Trading (Debt) Securities

Financial instruments, such as bonds or notes, that are bought and sold with the intention of making a profit from short-term price fluctuations.

Historical Cost

The original monetary value of an asset or expense as recorded at the time of purchase or acquisition.

Fair Value

An estimate of the price at which an asset would trade in a competitive auction setting.