If the Economy Is Initially in Long-Run Equilibrium, Which Statement

question 122

Multiple Choice

If the economy is initially in long-run equilibrium, which statement best describes the effects of a shift in aggregate demand?

• A) Prices and output are affected in both the short and long run.
• B) Prices and output are affected only in the short run.
• C) Prices are affected in the long and short run, but output only in the short run.
• D) Prices are affected in the long and short run, but output only in the long run.

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Definitions:

Face Value

The nominal value stated on a financial instrument, such as a bond or stock certificate.

Brokerage Fees

Charges levied by a broker for facilitating transactions between buyers and sellers.

Unrealized Loss

A loss that occurs on paper when the current market value of an investment is lower than its cost but has not been actualized through a sale.

Available-For-Sale Securities

Financial assets held by a firm that can be sold in the financial markets, not classified as held-to-maturity or trading securities.