Assuming That the Economy Is Currently in a Long- Run

question 3

Multiple Choice

Assuming that the economy is currently in a long- run equilibrium at Y^*, a negative aggregate demand shock with no change in the money supply will eventually result in

• A)an ongoing inflation in the economy.
• B)a lower price level and GDP below potential output.
• C)no change in the price level.
• D)a higher price level and GDP at potential GDP.
• E)a lower price level and GDP at its potential level.

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Definitions:

Systematics

The scientific study of the diversity of organisms and their evolutionary relationships. Taxonomy is an aspect of systematics. See taxonomy.

Binomial

A mathematical expression consisting of two terms joined by a plus or minus sign, or a system of nomenclature involving two names to classify species.

Cladogram

A diagram that depicts the evolutionary relationships among groups of organisms, showing how evolutionary lineages branched off from common ancestors.

Phyla

Major taxonomic groups into which organisms are classified, based on common characteristics and genetic lineage.