Suppose the Economy Is Initially in Long-Run Equilibrium

question 55

Multiple Choice

Suppose the economy is initially in long-run equilibrium. Then suppose there is an increase in military spending due to rising international tensions. According to the model of aggregate demand and aggregate supply, what happens to prices and output in the short run?

• A) Prices fall; output rises.
• B) Prices fall; output falls.
• C) Prices rise; output falls.
• D) Prices rise; output rises.

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Definitions:

Identity Theft

The fraudulent acquisition and use of a person's private identifying information, often for financial gain.

Information Systems

Systems that collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization.

Illegally Obtaining Information

The act of acquiring data or information without authorization or through unlawful means.

Risk Management

The process of identifying, assessing, and controlling threats to an organization's capital and earnings.