What Happens to Prices and Output When the Long-Run Aggregate-Supply

question 86

Multiple Choice

What happens to prices and output when the long-run aggregate-supply curve shifts right?

• A) Prices and output both increase.
• B) Prices and output both decrease.
• C) Prices increase and output decreases.
• D) Prices decrease and output increases.

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Definitions:

Gold Standard

A monetary system in which the value of currency is directly linked to gold, whereby currencies can be exchanged for a specific amount of gold.

Deflation

Deflation is an economic condition characterized by a general decrease in prices of goods and services, often indicating a reduction in the supply of money or credit.

International Exchange Rate System

The framework through which countries manage the value and exchange of their currencies in relation to one another.

Gold Standard

A currency system that directly correlates the value of a nation's paper money or currency with the value of gold.