Suppose the Economy Is in Equilibrium When There Is a Change

question 139

Multiple Choice

Suppose the economy is in equilibrium when there is a change in environmental policy that bans all pesticides and herbicides on farmland. We would expect to observe

• A) a decrease in aggregate supply and an increase in aggregate demand.
• B) a decrease in both real output and the natural rate of unemployment.
• C) a decrease in real output and an increase in the natural rate of unemployment.
• D) a decrease in real output and an increase in the price level.

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Definitions:

Milligram

A mass unit that is equivalent to 0.001 of a gram.

Gram

An expression of mass measuring exactly one thousandth of a kilogram.

Milligram

A unit of mass equal to one thousandth of a gram, used in the metric system.

Microgram

A unit of mass in the metric system, equal to one-millionth of a gram.