Scenario 14-1

question 73

Multiple Choice

Scenario 14-1. The economy is in long-run equilibrium. Suddenly, due to improved international relations and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
-Refer to Scenario 14-1. How does the new long-run equilibrium differ from the original one?

• A)Both the price level and real GDP are higher.
• B)Both the price level and real GDP are lower.
• C)The price level is the same and real GDP is higher.
• D)The price level is higher and real GDP is the same.

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Definitions:

Part

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Informational

Intended to provide information or knowledge about a topic, without necessarily persuading or entertaining the audience.

Analytical

Pertaining to or using analysis or logical reasoning to address a problem or dissect a concept.

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Statements that can be proven true or false, based on evidence and objective reality.