Beginning from a Position of Long-Run Equilibrium at the Full-Employment

question 116

Multiple Choice

Beginning from a position of long-run equilibrium at the full-employment level of real GDP, the economy's short-run response to an increase in the aggregate demand curve would be:

• A) a movement upward along the short-run aggregate supply curve.
• B) a movement upward along the long-run aggregate supply curve.
• C) a downward shift in the short-run aggregate supply curve.
• D) a shift in both the aggregate demand curve and the short-run aggregate supply c urve with a movement along the long-run aggregate supply curve.

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Definitions:

Numerical Dividing Line

A threshold or boundary defined by a specific numerical value or range.

Many

A term indicating a large number of items, people, or entities in a given context.

Crude Quantity Theory

A basic hypothesis regarding the relationship between the quantity of money in an economy and its level of prices.

Constant

A value that remains unchanged throughout the scope of an equation, analysis, or experiment.