Consider an Economy That Is Both in Long-Run and Short-Run

question 65

Multiple Choice

Consider an economy that is both in long-run and short-run equilibrium. Which of the following is likely to cause a positive output gap?

• A) An increase in production costs due to an increase in oil prices.
• B) A substantial increase in interest rates.
• C) Implementation of new technology that increases productivity of existing workers.
• D) Introduction of higher income tax rates.

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Definitions:

Hypothalamus

A region of the brain that plays a crucial role in many essential functions, including hormone release, regulation of body temperature, and control of hunger and thirst.

Premenstrual Syndrome (PMS)

A condition that affects a woman's emotions, physical health, and behavior during certain days of the menstrual cycle, generally just before her menses.

Menstrual Cycle

The monthly series of changes a woman's body goes through in preparation for the possibility of pregnancy.

Irritability

A state of increased sensitivity or reactivity to stimuli, often resulting in negative emotional responses.