Suppose the Economy Is in Long-Run Equilibrium

question 176

Multiple Choice

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in taxes, then in the short run, real GDP will

• A)rise and the price level might rise, fall, or stay the same.In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected.
• B)fall and the price level might rise, fall, or stay the same.In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected.
• C)rise and the price level might rise, fall, or stay the same.In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.
• D)fall and the price level might rise, fall, or stay the same.In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.

---

Definitions:

Unrealistic Optimism

Awareness that certain health-related behaviors are dangerous but erroneously viewing those dangers as risks for others rather than oneself.

Lung Cancer

A type of cancer that originates in the lungs, often associated with smoking and environmental factors.

Pessimistic Explanatory Style

A cognitive approach where individuals habitually attribute negative events to permanent, personal, and pervasive causes.

Experimental Research

A method of research that involves manipulating one variable to determine if changes in one variable cause changes in another variable.