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

question 88

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 the Canadian- dollar price of all imported raw materials. In the short run, . In the long run, .

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

Stock Market

A public marketplace for buying and selling shares of publicly held companies, reflecting the economic trends and financial health of businesses and countries.

Declined

A decrease in quantity, quality, or strength; refusal to accept or agree to something, often a proposal or request.

Mikhail Gorbachev

The last leader of the Soviet Union, known for his policies of glasnost (openness) and perestroika (restructuring), leading to the end of the Cold War.

Pro-Democracy Movements

Collective actions or initiatives aimed at advocating for democratic governance and the expansion of democratic rights and institutions.