Suppose the Economy Is in Long-Run Equilibrium

question 199

Multiple Choice

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, 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.
• B)real GDP will fall and the price level might rise, fall, or stay the same.
• C)the price level will rise, and real GDP might rise, fall, or stay the same.
• D)the price level will fall, and real GDP might rise, fall, or stay the same.

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Definitions:

Atlantic Slave Trade

The transatlantic trading of African people, primarily to the Americas, where they were sold as slaves from the 16th to the 19th centuries, a key part of the triangular trade.

Forefront

The leading or most important position or place, often used in the context of being at the forefront of a particular field or movement.

Movement

An act of changing physical location or position or of having this changed.

Cotton Gin

A machine invented by Eli Whitney in 1793 that quickly and efficiently removed seeds from cotton fibers, revolutionizing the cotton industry and significantly impacting the institution of slavery in the United States.