Suppose the Economy Is in Long-Run Equilibrium

question 91

Multiple Choice

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp increase in the minimum wage,a major new discovery of oil,a large influx of immigrants,and new environmental regulations that reduce electricity production.In the short run,we would expect

• A)the price level to rise and real GDP to fall.
• B)the price level to fall and real GDP to rise.
• C)the price level and real GDP both to stay the same.
• D)All of the above are possible.

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Definitions:

Acetaminophen

A medication used to reduce fever and relieve pain, known also as paracetamol in some countries.

Alcohol

A chemical substance found in beverages such as beer, wine, and spirits, that can cause intoxication and has various health impacts when consumed.

Peripheral Nerves

Nerves located outside of the brain and spinal cord, responsible for relaying information between the body and the central nervous system.

Dorsal Horn

A region of the spinal cord's gray matter that processes sensory information, receiving inputs from receptors in the body concerning touch, pain, and temperature.