Assume That an Economy Is Currently in Long- Run Equilibrium

question 22

Multiple Choice

Assume that an economy is currently in long- run equilibrium at its potential output and that it is subjected to a positive demand shock. When the economy moves back to producing its potential level of national income, the price level will be

• A)equal to what it was originally before the demand shock.
• B)lower than it was in the short- run equilibrium but higher than it was originally.
• C)lower than it was in short- run equilibrium and the lower than it was originally.
• D)higher than it was in the short- run equilibrium but lower than it was originally.
• E)higher than it was in the short- run equilibrium and even higher than it was originally.

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Definitions:

Public Institutions

Organizations that operate in the public sector, primarily funded by taxpayers and designed to provide services to the public.

Temporal Motivation Theory

A theory that explains motivation in terms of time, considering how individual time perceptions influence goal-setting and prioritization.

Maslow's Needs-Hierarchy

A theory in psychology proposed by Abraham Maslow that suggests human motivations are arranged in a hierarchy of needs, from basic physical needs to complex psychological needs.

Job Satisfaction

The level of contentment employees feel about their work, which can affect their performance and commitment.