If the Current Short-Run Equilibrium Level of Output Is Greater

question 111

Multiple Choice

If the current short-run equilibrium level of output is greater than full-employment output,we can then expect that in the long run the

• A) price level will rise and short-run aggregate supply will fall.
• B) price level will rise and aggregate demand will fall.
• C) price level will fall and short-run aggregate supply will rise.
• D) price level will fall and aggregate demand will rise.
• E) long-run aggregate supply will increase.

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Definitions:

Mudflows

Rapid downhill movement of water-laden earth materials, primarily composed of fine-grained soils and clays, which can cause significant erosion and damage.

Pyroclastic Flow

A hot, fast-moving and deadly mixture of gases, ash, and volcanic material produced by explosive eruptions.

Scoria

A highly vesicular, dark colored volcanic rock that may or may not contain crystals, typically formed from the cooling of lava.

Tephra

Volcanic material ejected into the air during an eruption, including ash, bombs, and blocks, which can affect wide areas downwind of a volcano.