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

question 78

Multiple Choice

Starting from long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, a five-period positive demand shock causes output to _____ until returning to the natural level in the long run.

• A) remain continuously above the natural level of output
• B) move above and then below the natural level of output
• C) remain continuously below the natural level of output
• D) move below and then above the natural level of output

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Definitions:

Cease to Exist

To stop existing or to come to an end completely, often used in the context of organizations, entities, or life.

Substantially All

Pertaining to the majority or nearly the complete portion of something, often used in legal contexts concerning asset transfers.

Shareholder Approval

The process by which actions affecting a corporation and its governance must be approved by a majority of its shareholders.

Ordinary Course

Activities that are considered part of the normal, day-to-day operations of a business.