Suppose the Economy Is in Long-Run Equilibrium

question 463

Multiple Choice

Suppose the economy is in long-run equilibrium. If there is a tax cut at the same time that major new sources of oil are discovered in the country, then in the short-run

• A)real GDP will rise and the price level might rise, fall, or stay the same.
• B)real GDP will fall and the price level might rise, fall, or stay the same.
• C)the price level will rise, and real GDP might rise, fall, or stay the same.
• D)the price level will fall, and real GDP might rise, fall, or stay the same.

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Definitions:

Liquidity

The ability of an asset to be converted into cash quickly and without any significant loss in value.

Cyclical Activities

Economic or business activities that are affected by the ups and downs of the economy, showing a tendency to rise and fall in response to economic cycles.

Cash Surpluses

Refers to the amount of cash that exceeds the cash needed to fund immediate expenses and operational activities.

BAT Model

The Behavior, Attitude, Technique (BAT) Model is a framework used for improving sales effectiveness and training by focusing on the behavior, attitude, and techniques of sales personnel.