Consider an Economy Starting from a Position of Full Employment

question 25

Multiple Choice

Consider an economy starting from a position of full employment. Which one of the following occurs as a result of an advance in technology?

• A)The price level falls.
• B)Real GDP decreases in the short run.
• C)An inflationary gap arises.
• D)Factor prices rise in the long run, shifting the short-run aggregate supply curve leftward.
• E)The long-run aggregate supply curve shifts leftward to create the new long-run equilibrium.

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Definitions:

Palatine

Pertaining to the palate, especially referring to bones or structures associated with the roof of the mouth.

Larynx

The voice box located in the throat, which contains the vocal cords and is involved in breathing, producing sound, and protecting the trachea against food aspiration.

Adam's Apple

The prominent protrusion in the neck, formed by the thyroid cartilage of the larynx, more prominent in males.

Cricoid

The cricoid is a cartilage ring located in the larynx (voice box) at the top of the trachea; it plays a key role in keeping the airway open for respiration.