Suppose the Economy Is in Long-Run Equilibrium

question 14

Multiple Choice

Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect

• A) the price level to rise and real GDP to fall.
• B) the price level to fall and real GDP to rise.
• C) the price level and real GDP both to stay the same.
• D) All of the above are possible.

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Definitions:

Misinterpretations of Reality

Cognitive distortions or errors in thought that lead to incorrect perceptions or understanding of the external world.

Borderline Personality Disorder

Borderline Personality Disorder is a mental health disorder characterized by unstable moods, behavior, and relationships, often resulting in significant distress or impulsivity.

Outburst

A sudden, intense expression of emotion, such as anger or frustration, which can be verbal or physical.

Splitting

A defense mechanism often associated with borderline personality disorder, characterized by viewing people or situations as all good or all bad.