Suppose the Economy Is Initially in Long-Run Equilibrium and Aggregate

question 30

Multiple Choice

Suppose the economy is initially in long-run equilibrium and aggregate demand rises. In the long run prices

• A) and output are higher than in the original long-run equilibrium.
• B) and output are lower than in the original long-run equilibrium.
• C) are higher and output is the same as the original long-run equilibrium.
• D) are the same and output is lower than in the original long-run equilibrium.

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Definitions:

Industry Standard

Established norms, specifications, or criteria within a particular industry, serving as a benchmark for quality and compliance.

Expected Cash Flows

The projected cash receipts and payments a business expects over a certain period, considering various scenarios.

Abandonment Option

In project management and investment, the option to cease further investment or project development if returns do not meet a certain threshold.

Put Option

A financial contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a specified price within a specified time.