Suppose the Economy Is Initially in Long-Run Equilibrium and Aggregate

question 30

Multiple Choice

Suppose the economy is initially in long-run equilibrium and aggregate demand rises. In the long run prices

• A) and output are higher than in the original long-run equilibrium.
• B) and output are lower than in the original long-run equilibrium.
• C) are higher and output is the same as the original long-run equilibrium.
• D) are the same and output is lower than in the original long-run equilibrium.

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Definitions:

Cost Advantages

Economic benefits enjoyed by a company that can produce goods or services at a lower cost compared to its competitors, often due to greater efficiency or economies of scale.

Differentiated Products

Goods or services that are distinct in quality, features, design, or brand from those offered by competitors in the same market.

Market Demand

The total quantity of a product or service that consumers are willing and able to purchase at various prices within a given period.

Competitive Industry

A market in which multiple firms compete against each other to sell their goods or services to consumers.