Suppose the Economy Is at a Short-Run Equilibrium GDP That

question 202

Multiple Choice

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

• A)Output will increase.
• B)Prices will decline.
• C)Unemployment will decline.
• D)Short-run aggregate supply will shift to the left.

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Definitions:

Sausage

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Concrete Operational Stage

A stage in Piaget’s theory of cognitive development, from about 7 to 12 years, during which children gain the ability to think logically about concrete events.

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