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.

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Definitions:

Inventory Conversion Period

The average length of time to convert materials into finished goods and then to sell them; calculated by dividing total inventory by sales per day.

Operating Cycle

The Operating Cycle is the period of time it takes for a business to purchase inventory, sell products, and convert the sales into cash, reflecting the efficiency with which a company manages its core operations.

Cash

Money in the form of coins or banknotes, especially that issued by a government.

Accruals

Accounting adjustments for revenues that have been earned but not yet recorded, and expenses that have been incurred but not yet recorded.