Suppose the Economy Is Initially in Long-Run Equilibrium

question 34

Multiple Choice

Suppose the economy is initially in long-run equilibrium.Which of the following events leads to an increase in the price level and real GDP in the short run?

• A)a decrease in health insurance premiums paid by firms raises the cost of employing labor
• B)an increase in government transfer payments
• C)an increase in the cost of a key input such as oil
• D)a sharp fall in stock market prices

---

Definitions:

Weber

Refers to Max Weber, a German sociologist, who is known for his theory on the bureaucratic management structure and the concept of rationalization.

Charisma

A trait found in individuals who possess a compelling attractiveness or charm that can inspire devotion in others.

Formal Authority

Power granted to an individual or organization based on their position within the hierarchical structure of an organization.

Positive Charismatic

Refers to individuals who possess an inspiring, optimistic, and compelling charm that influences others positively.