Suppose the Economy Is Initially in Long-Run Equilibrium

question 79

Multiple Choice

Suppose the economy is initially in long-run equilibrium.Which of the following events leads to a decrease 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

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Definitions:

Tempted

The feeling or state of being enticed or inclined to do something, especially something that is considered unwise or morally wrong.

Passively

In a manner that allows things to happen without active response or resistance.

Refreezing Step

The final phase in Lewin's change model where new behaviors or attitudes are solidified into the culture or habits.

Relatively Secure

Describes a state or condition that is generally safe or protected from harm or loss when compared to other states or conditions.