After a Negative Demand Shock,what Are the Expected Long-Run Adjustments

question 46

Multiple Choice

After a negative demand shock,what are the expected long-run adjustments?

• A) Wages rise,price level rises,and output falls back to potential
• B) Wages fall,price level rises,and output falls back to potential
• C) Wages fall,price level falls,and output increases back to potential
• D) Wages fall,price level rises,and output increases back to potential
• E) Wages rise,price level falls,and output increases back to potential.

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Definitions:

Labor

The human effort, both physical and mental, that is used in the production process to create goods and services.

Slope

In mathematics and economics, the measure of the steepness or incline of a line, often used to describe changes in variables in relation to one another.

Isocost

A line representing all combinations of a firm's inputs that cost the same amount.

Capital

Wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.