Suppose the Economy Is in Long-Run Equilibrium

question 184

Multiple Choice

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, then in the short run, real GDP will

• A)rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected.
• B)fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be unaffected.
• C)rise and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.
• D)fall and the price level might rise, fall, or stay the same. In the long run, the price level might rise, fall, or stay the same but real GDP will be lower.

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Definitions:

Total Cost Transferred

The entire sum of costs that have been allocated from one department or process to another within an organization.

Processing Department

A specialized unit within a manufacturing facility where a specific type of processing or production stage is carried out.

Cost System

An accounting method used to track, record, and analyze costs associated with a company's operations, products, or services.

Cost Per Equivalent Unit

A calculation used in process costing that determines the cost allocated to each unit, considering the stage of completion.