Suppose the Economy Is in Long-Run Equilibrium

question 29

Multiple Choice

Suppose the economy is in long-run equilibrium.If there is a sharp decline in government purchases combined with a significant increase in immigration of skilled workers,then in the short run,

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

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Definitions:

Deductible

The amount paid out of pocket by the policyholder before an insurance company pays the remaining costs.

Straight Line Depreciation

A line that shows a constant decline in the value of something, such as a car that loses the same value each year.

Odometer

A gauge on the dashboard of a car that indicates the distance the car has traveled since it left the factory.

Odometer

A device used in vehicles to measure the distance traveled.