-Refer to Figure 15-15

question 165

Multiple Choice

-Refer to Figure 15-15.Suppose the economy is producing Y₁ and a supply shock moves the economy from AS₁ to AS₂.In the long run,we would expect

• A) falling wages to shift aggregate supply back to AS₁
• B) rising wages to cause a further upward shift of the aggregate supply curve
• C) the decrease in real GDP to shift the aggregate demand curve to the left
• D) the increase in the price level to decrease aggregate demand
• E) output to remain at the new equilibrium.

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Definitions:

Economic Slowdown

A period of reduced economic activity and growth rates compared to previous periods.

Net Profit

The amount of money that remains from revenues after all operating expenses, taxes, and costs have been subtracted; a key indicator of financial health.

ACP

Accelerated cost recovery system, a method used for calculating depreciation expenses for tax purposes.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specified period, indicating operational efficiency.