Imagine the U

question 360

Multiple Choice

Imagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar increases. At the same time, people in the U.S. revise their expectations so that the expected price level falls. We would expect that 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:

Induction

A reasoning process that involves making generalizations based on specific observations or instances.

Deduction

A logical process in which a conclusion follows necessarily from the stated premises, implying the truth of the conclusion if the premises are true.

Reasoning

The process of thinking about something in a logical way in order to form a conclusion or judgment.

Judgment

The process of extrapolating from evidence to draw conclusions.