Suppose the Economy Was Initially in a Long-Run Equilibrium

question 268

Multiple Choice

Suppose the economy was initially in a long-run equilibrium. Then the world economy expands so that foreign incomes rise. U.S. aggregate demand ________ and eventually the money wage rate ________.

• A) increases; rises
• B) increases; falls
• C) decreases; rises
• D) decreases; falls

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Definitions:

Notes Payable

Financial obligations represented by written promises to pay specified amounts of money at future dates.

Accounts Payable

Liabilities representing amounts owed by a company to suppliers for goods and services purchased on credit.

Journal Entry

A record in the accounting journals that documents a financial transaction.

FICA Taxes

Taxes imposed by the Federal Insurance Contributions Act, funding Social Security and Medicare programs, withheld from employees’ pay and matched by employers.