When All Prices (Including Wages) Have Fully Adjusted to Previous

question 69

Multiple Choice

When all prices (including wages) have fully adjusted to previous shifts in aggregate supply or demand and the flow of spending, saving, borrowing, and lending will continue until something else changes, this is called

• A)the substitution-of-foreign-goods effect.
• B)the wealth effect or real-balances effect.
• C)the constant nominal income effect.
• D)long-run equilibrium.

---

Definitions:

Olympia

An ancient Greek sanctuary site, famous as the location of the original Olympic Games, and home to the Temple of Zeus.

Velázquez

A Spanish painter who was one of the leading artists in the court of King Philip IV and is known for his portraits and use of light.

Social Preferences

Individuals' preferences that are not solely based on their own self-interest but include concerns for the welfare of others in their decisions.

Aggregating

The process of combining multiple individual items, values, or data points into a single summary figure or total.