If the Long-Run Equilibrium of an Economy Is Disrupted by an Unexpected

question 55

Multiple Choice

If the long-run equilibrium of an economy is disrupted by an unexpected shift to a more expansionary monetary policy, the policy shift will

• A) reduce aggregate demand and real output in the short run.
• B) lead to a higher rate of unemployment in the short run.
• C) stimulate real output in the short run, but in the long run, its primary impact will be on the general level of prices.
• D) lead to an increase in the general level of prices in the short run, but in the long run, its primary impact will be an expansion in real output.

---

Definitions:

Debt-Equity Ratio

A proportionality indicator for assessing how company assets are funded through debt and equity.

Total Debt Ratio

A financial metric that compares an organization's total liabilities to its total assets, used to assess its leverage and financial health.

Total Debt Ratio

A financial ratio that compares a company's total liabilities to its total assets, indicating the proportion of a company's assets financed through debt.

Construct Validity

The degree to which a test measures what it claims, or purports, to be measuring.