Canadian Businesses Expect Future Profits to Rise

question 103

Multiple Choice

Canadian businesses expect future profits to rise.Starting from a position of long- run equilibrium, what effect does this event have on Canada's economy in the short run?

• A)Real GDP increases and the price level rises.
• B)Real GDP decreases and the price level falls.
• C)Real GDP increases and the price level falls.
• D)Real GDP decreases and the price level rises.
• E)There is no change in either real GDP or the price level.

---

Definitions:

Unemployment Benefits

Payments made by the government or a social insurance scheme to unemployed individuals who meet certain eligibility criteria.

Aggregate Demand

The combined demand for goods and services across an economy, pegged at a particular overall price level during a predetermined time period.

Constitutional Amendment

A formal change or addition proposed or made to a constitution, which alters its content and legal ordering.

Balanced Budget

A financial plan whereby revenues and expenditures are equal, resulting in no deficit for the given period.