If the Economy Is Above Long-Run Equilibrium Output, What Will

question 264

Multiple Choice

If the economy is above long-run equilibrium output, what will happen in the long run if SRAS adjusts?

• A) Prices rise and output increases.
• B) Prices rise and output decreases.
• C) Prices fall and output increases.
• D) Prices fall and output decreases.

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Definitions:

Spin-Offs

Businesses or units that were once part of a larger company but have been separated to form a new independent entity.

Corporate Bonds

Debt securities issued by corporations to finance their operations, projects, or expansion, which pay interest to investors until maturity, at which point the principal amount is repaid.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable and inventories, and meeting other short-term liabilities.

Trade Credit

A type of commercial financing where a customer is allowed to purchase goods or services and pay the supplier at a later scheduled date.