Suppose the Economy Is Initially in Long-Run Equilibrium

question 227

Multiple Choice

Suppose the economy is initially in long-run equilibrium. Which of the following best describes the state of the economy after an increase in aggregate demand?

• A)Prices and output are higher.
• B)Prices and output are lower.
• C)Prices are higher and output is the same.
• D)Prices are the same and output is lower.

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Definitions:

Plant Manager's Salary

Compensation awarded to the individual responsible for overseeing the operations of a manufacturing facility or plant.

Raw Materials

Basic substances in their natural, modified, or semi-processed states, used as inputs for production.

Cost of Goods Sold LIFO

An inventory costing method where the last items placed into inventory are the first ones to be recorded as sold, which can affect the cost of goods sold and inventory valuation.

LIFO Reserve

LIFO reserve is the difference between the cost of inventory calculated under the Last In, First Out (LIFO) method and its cost calculated under the First In, First Out (FIFO) method.