Suppose That You Have the Following Information About the Economy

question 109

Multiple Choice

Suppose that you have the following information about the economy, where all figures are in millions of dollars:
Full employment output =$2,000
Consumption = $1,200 Investment = $400
Government spending = $500
Net exports =-$200
Because short-run output is ________ full-employment output, in the long run we would expect the price level to ________.

• A) less than; rise
• B) less than; fall
• C) greater than; rise
• D) greater than; fall
• E) equal to; remain unchanged

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Definitions:

Bandura

Refers to Albert Bandura, a psychologist known for his social learning theory, emphasizing the importance of observing, modeling, and imitating the behaviors of others.

Cognitive Therapy

A form of psychotherapy that focuses on changing negative patterns of thought to improve emotional regulation and develop personal coping strategies.

Depression

An emotional health issue defined by a continuous downhearted mood or an absence of pleasure in tasks, significantly affecting daily operations.

Beck

Refers to Aaron T. Beck, a psychiatrist known for his research in psychotherapy, cognitive therapy, and cognitive behavioral therapy.