Pessimism Suppose the Economy Is in Long-Run Equilibrium. Then Because of of Corporate

question 106

Multiple Choice

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.


-Refer to Optimism.How is the new long-run equilibrium different from the original one?

• A)both price and real GDP are higher
• B)both price and real GDP are lower.
• C)the price level is the same and GDP is higher.
• D)the price level is higher and real GDP is the same.

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Definitions:

Egg Market

The commercial market involved in the production, distribution, and sale of eggs.

Egg Demand

The desire or market requirement for eggs, influenced by factors such as price, income, and preferences.

Egg Supply

The total quantity of eggs available in the market for consumption, affected by factors like production, import, and existing stock.

Government Subsidies

Government subsidies are financial grants or tax breaks given by the government to support businesses, industries, or economic activities that are considered beneficial for the public.