Beginning at Long-Run Equilibrium in the Dynamic Model of Aggregate

question 17

Multiple Choice

Beginning at long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, in the first period of a multi-period positive demand shock, output _____, and inflation _____.

• A)increases; increases
• B)increases; decreases
• C)decreases; decreases
• D)decreases; increases

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Definitions:

Costs Of Production

The expenses incurred in manufacturing a product or providing a service, which may include raw materials, labor, overhead, and any other costs directly tied to the production process.

Basketball

A team sport in which two teams, typically of five players each, opposing one another on a rectangular court, compete with the primary objective of shooting a basketball through the defender's hoop.

U.S. Tariff

A tax imposed by the United States government on imports or exports of goods.

Oil

A fossil fuel that is used primarily for energy production and as a raw material in the manufacturing of plastics and other chemicals.