Suppose the Economy Is in Long-Run Equilibrium

question 220

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,then we would expect that in the short run,

• A)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)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)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)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.

---

Definitions:

Profit-Maximizing

The process or strategy of adjusting production and pricing to achieve the highest possible profit based on costs and market demand.

Derived Demand

is the demand for a product or service that arises from the demand for another product or service, such as the demand for steel being driven by the demand for cars.

Capital Demand

The desire or need for capital goods, such as machinery and tools, that are used to produce other goods and services.

Product Demand

The desire and willingness of consumers to purchase a specific quantity of goods or services at various prices during a certain period.