Consider an AD/AS Model in Long- Run Equilibrium

question 22

Multiple Choice

Consider an AD/AS model in long- run equilibrium. An output gap, caused by a leftward shift of the AD curve, would be eliminated if

• A)wages and other factor prices fell quickly.
• B)the AS curve shifted upward.
• C)real national income decreased.
• D)wages rose quickly.
• E)prices rose quickly.

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Definitions:

Ecosphere

An ecological sphere; a concept encompassing all living organisms and their physical environment on the planet.

Sustainable Timber

Timber harvested in a way that maintains the forest's biodiversity, productivity, and ecological processes over the long term.

Widespread Destruction

Extensive damage or devastation covering a large area, often due to natural disasters or human activities.

Ecologically Extinct

A state in which a species is present in such low numbers that it no longer plays a significant ecological role in its ecosystem.