Suppose the Economy Is in Long-Run Equilibrium at the Level

question 104

Multiple Choice

Suppose the economy is in long-run equilibrium at the level of potential output.What will be the long-run effect of an expansionary monetary policy?  

• A) a higher price level 
• B) a lower price level 
• C) a higher level of real output 
• D) a lower level of real output

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Definitions:

Direct Labor Requirement

The total amount of work time needed by employees to produce a good or service, often used in budgeting and planning manufacturing processes.

Labor Rate

The cost associated with hiring labor, often expressed per hour or unit of work.

Sales Budget

A financial plan that forecasts the sales revenue, including the volume of sales and the unit prices, for a specific period.

Rolling Budgets

Budgets that are continuously updated by adding a new budget period as the current period is completed, extending the budget into the future.