If Persistent Inflation Was Due to Declines in Long-Run Aggregate

question 231

Multiple Choice

If persistent inflation was due to declines in long-run aggregate supply, what pattern would be observed?

• A) Increases in the price level would occur simultaneously with decreases in real GDP.
• B) Increases in the price level would occur simultaneously with increases in real GDP.
• C) Only prices of goods would increase; prices of services would remain constant.
• D) Only prices of services would increase; prices of goods would remain constant.

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Definitions:

Endorphins

“Morphine within”—natural, opiatelike neurotransmitters linked to pain control and to pleasure.

Axon

A long, slender projection of a nerve cell that conducts electrical impulses away from the neuron's cell body.

Neuron

A nerve cell that is the basic building block of the nervous system, responsible for transmitting information through electrical and chemical signals.

Leg Muscle

A group of muscles in the lower limb that are primarily responsible for movement and support of the ankle, foot, and knee.