If Persistent Inflation Was Due to Declines in Long-Run Aggregate

question 231

Multiple Choice

If persistent inflation was due to declines in long-run aggregate supply, what pattern would be observed?

• A) Increases in the price level would occur simultaneously with decreases in real GDP.
• B) Increases in the price level would occur simultaneously with increases in real GDP.
• C) Only prices of goods would increase; prices of services would remain constant.
• D) Only prices of services would increase; prices of goods would remain constant.

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Definitions:

Adult's Brain

A mature human brain that has reached full development, typically by the mid-20s, characterized by complex cognitive capacities.

Newborn's Brain

Refers to the brain of a newborn child, characterized by rapid development and high plasticity during the first few years of life.

Synapses

The junctions between neurons through which they communicate with each other using chemical or electrical signals.

Axons

Long, slender projections of nerve cells that transmit electrical impulses away from the neuron's cell body to other neurons or muscles.