Suppose an Economy Is Initially in Long-Run Equilibrium and It

question 29

Multiple Choice

Suppose an economy is initially in long-run equilibrium and it then experiences a supply shock in the form of exceptionally high energy prices.Which of these will be true in this economy?

• A)The short-run aggregate supply curve will shift leftward,and the long-run supply curve will shift rightward.
• B)The short-run aggregate supply curve and the long-run supply curve will shift rightward.
• C)The short-run aggregate supply curve will not shift,and the long-run aggregate supply curve will shift rightward.
• D)The short-run aggregate supply curve will shift rightward,but the long-run aggregate supply curve will not shift.
• E)The short-run aggregate supply curve and the long-run supply curve will shift leftward.

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Definitions:

Marginal Rate

Often refers to the marginal tax rate, which is the tax rate applied to an additional dollar of income.

Transformation

In an economic context, it refers to the process of changing inputs into outputs, often related to the production process in industries or economies.

Resources

Assets, materials, and inputs used by organizations or economies to produce goods and services.

Outputs

Refers to the total amount of goods or services produced by a company or an economy.