Suppose the Economy Is in Long-Run Equilibrium

question 158

Multiple Choice

Suppose the economy is in long-run equilibrium. If there is a sharp decline in the stock market combined with a significant increase in immigration of skilled workers, what would we expect to happen?

• A) In the short run, real GDP will rise, and the price level might rise, fall, or stay the same. In the long-run, real GDP will rise, and the price level might rise, fall, or stay the same.
• B) In the short run, the price level will fall, and real GDP might rise, fall, or stay the same. In the long-run, real GDP and the price level will be unaffected.
• C) In the short run, the price level will rise, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise, and the price level will fall.
• D) In the short run, the price level will fall, and real GDP might rise, fall, or stay the same. In the long run, real GDP will rise, and the price level will fall.

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Definitions:

Conformity

Adjusting one's behavior or thinking to match those of a group standard.

Incorrect Majority

The phenomenon where a group wrongfully influences an individual or minority to conform to a mistaken or inaccurate viewpoint.

Groupthink

A mental effect experienced by a group, where the pursuit of agreement or uniformity leads to illogical or inefficient outcomes in decision-making.

Irving Janis

A psychologist best known for his research on group dynamics, including the concept of "groupthink."