Scenario 14-2

question 234

Multiple Choice

Scenario 14-2. The economy is in long-run equilibrium. Suddenly, due to corporate scandals, international tensions, and the loss of confidence among policymakers, citizens become pessimistic concerning the future. They maintain this level of pessimism for a long time.
-Refer to Scenario 14-2. 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 lower.
• D)The price level is lower and real GDP is the same.

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Definitions:

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