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

question 51

Multiple Choice

Consider an economy which is in both long-run and short-run equilibrium. Which of the following will occur in the short-run if consumer confidence in this economy fell significantly?

• A) The aggregate demand curve will shift to the left.
• B) Firms will increase production as real wages will have fallen.
• C) The short-run aggregate supply curve will move to the right.
• D) The level of inflation in the economy will increase.

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Definitions:

Salt Dome

A type of geological structure formed when a thick bed of evaporite minerals (mainly salt) found at depth intrudes vertically into surrounding rock layers.

Volcanic Conduit

A pipe-like structure through which magma moves from a magma chamber to the Earth's surface.

Diamond Pipe

A steep, cylindrical- to funnel-shaped volcanic conduit that contains diamonds dispersed in an igneous rock; synonym kimberlite pipe.

Copper Veins

Concentrated occurrences of copper minerals found within rock formations, often extracted through mining.