Suppose the Economy Is in Long-Run Equilibrium

question 103

Multiple Choice

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp decline in the stock market, a tax cut, an increase in the money supply, and a decline in the value of the dollar. In the short run, what would we expect to happen?

• A)the price level and real GDP both to rise
• B)the price level and real GDP both to fall
• C)the price level and real GDP both to stay the same
• D)The price level and real GDP may rise, fall, or remain the same.

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Definitions:

Annual Weight Gain

The amount of weight an individual gains over the course of a year, which can be influenced by various factors including diet, exercise, and metabolism.

Gross Motor Skills

Gross motor skills involve the movements of large muscles in the body, such as walking, running, and jumping.

Brain Development

The process of growth and maturation of the brain, which starts in utero and continues into early adulthood, involving changes in structure, function, and connectivity.

Myelination

The formation of a myelin sheath around the nerve fibers, which increases the speed and efficiency of electrical signals in the nervous system.