Suppose the Current Situation Is Such That the Price Level

question 3

Multiple Choice

Suppose the current situation is such that the price level is 120,real GDP is $13 trillion,and GDP along the long-run aggregate supply curve is $12.6 trillion.What will take place to restore the long-run equilibrium?

• A) The price level will fall until long-run aggregate supply increases to $13 trillion.
• B) The price level will fall and money wage rates will rise until real GDP along the long-run aggregate supply curve is $13 trillion.
• C) Money wage rates will rise until real GDP is $12.6 trillion.
• D) Aggregate demand will increase until both short-run and long-run aggregate supply equal $13 trillion.

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Definitions:

Patent Application

A formal request submitted to a patent office for the grant of a patent for the new and useful invention it describes.

20-Year Period

A term generally used to describe a fixed duration of twenty years, which can be relevant in various contexts, such as financial investments, statutes of limitations, and property rights.

General Welfare Clause

Article I, Section 8, Clause 1 of the U.S. Constitution which reads in part that Congress is empowered to “lay and collect taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common defense and general welfare of the United States.”