Suppose Canada's Economy Is in a Long- Run Equilibrium with Real

question 83

Multiple Choice

Suppose Canada's economy is in a long- run equilibrium with real GDP equal to potential output. Now suppose there is an increase in world demand for Canada's goods. In the short run, . In the long run, .

• A)real GDP and the price level both rise; real GDP is above its original level with a higher price level
• B)real GDP and the price level both rise; real GDP returns to its original level with a higher price level
• C)real GDP and the price level both fall; real GDP is below its original level with a lower price level
• D)real GDP falls and the price level rises; real GDP is below its original level with a higher price level
• E)real GDP rises and the price level falls; real GDP returns to its original level with a lower price level

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Definitions:

Halo Effect

The tendency to assume that a person has generally positive or negative traits as a result of observing one major positive or negative trait.

Fundamental Attribution Errors

The tendency to overemphasize personality-based explanations for behaviors observed in others while underemphasizing the role of situational factors.

Situational Attribution

Attributing a behavior to some external cause or factor operating within the situation; an external attribution.

Social Psychology

The scientific study of how individuals think, feel, and behave in social contexts.