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.

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Definitions:

Emotion

A complex state of feeling that results in physical and psychological changes influencing thought and behavior.

Conflict Situation

A situation where two or more parties have opposing interests, goals, or values, leading to a disagreement or dispute.

Approach

A way or method of dealing with something or towards completing a task or challenge.

Avoidance Forces

Factors or motivations that lead individuals or groups to avoid certain situations or decisions due to anticipated negative outcomes.