An Economy Is Operating at Long-Run Equilibrium

question 215

Multiple Choice

An economy is operating at long-run equilibrium. What is the most likely result of an aggressive expansionary fiscal policy?

• A) no change in long-run GDP and employment
• B) a decrease in the unemployment rate
• C) a decrease in prices
• D) a rise in long-run employment

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Definitions:

Disbursement Float

The time gap between the writing of a check and the reduction of the payer's bank account balance.

Short-term Investments

Assets that can easily be converted into cash, typically within 5 years or less.

Ethically Questionable

Pertains to actions or decisions that raise concerns regarding their morality or adherence to accepted ethical standards.

Processing Delay

The time taken between the initiation and completion of a process, often referring to the lag in transaction or operational activities.