The Economy Was in Long-Run Equilibrium When Aggregate Demand Increased

question 137

Multiple Choice

The economy was in long-run equilibrium when aggregate demand increased.At this point in time,the expected inflation has started to adjust to the new higher actual inflation rate.According to the (Friedman) natural rate theory,this means the unemployment rate in the economy must currently be

• A) decreasing.
• B) increasing.
• C) higher than it was in long-run equilibrium.
• D) equal to what it was in long-run equilibrium.
• E) There is not enough information to answer the question.

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Profit

The financial gain made in a transaction, calculated as the difference between the revenue earned and the costs incurred.

Drug Patent

Legal protection granted to the inventor of a new pharmaceutical, allowing exclusive rights to manufacture and sell the drug for a certain period.

Marginal Revenue

The additional revenue that a producer receives from selling one more unit of a good or service.

Marginal Cost

The cost incurred by producing one additional unit of a good or service.