Starting from Long-Run Equilibrium in the Dynamic Model of Aggregate

question 83

Multiple Choice

Starting from long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, output immediately decreases as a result of a one-period positive supply shock because:

• A) the central bank raises the nominal and real interest rates in response to the increase in inflation.
• B) the higher prices generate a negative demand shock that reduces output.
• C) the natural level of output falls in response to the increase in inflation.
• D) the central bank increases the target rate of inflation in response to the increase in inflation.

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Definitions:

Glomerulonephritis

A category of kidney disease characterized by inflammation of the glomeruli, which are the small filtering units within the kidney.

Polycystic Kidney Disease

A genetic disorder characterized by the growth of numerous cysts filled with fluid in the kidneys, potentially leading to kidney failure.

Renal Pyramids

Triangular-shaped areas in the medulla of the kidney.

Renal Medulla

The innermost part of the kidney, composed of renal pyramids and tubules, involved in urine formation and concentration.