Suppose the Economy Is in Long-Run Equilibrium

question 95

Multiple Choice

Suppose the economy is in long-run equilibrium.In a short span of time,there is a sharp increase in the minimum wage,a major new discovery of oil,a large influx of immigrants,and new environmental regulations that raise the cost of electricity production.In the short run

• A) the price level will rise and real GDP will fall.
• B) the price level will fall and real GDP twill rise.
• C) the price level and real GDP will both stay the same.
• D) All of the above are possible.

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Definitions:

Stable

Constant and unchanging; not prone to fluctuations or sudden changes.

External

Pertaining to or located on the outside of something; often refers to influences or factors coming from the environment around an individual or system.

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A child's consistent reluctance or refusal to attend school, often due to anxiety, fear, or other emotional issues rather than mere truancy.

Separation Anxiety Disorder

A psychological condition in which an individual experiences excessive anxiety regarding separation from home or from those to whom the individual has a strong emotional attachment.