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:

Divorced

A marital status indicating that a person has legally ended their marriage.

Income Tax Return

A document filed with a tax authority that reports income, expenses, and other pertinent tax information, used to calculate tax liability.

Basic Standard Deduction

The preset amount subtracted from income that is not subject to federal income tax, differing by filing status and not requiring itemization.

Head of Household

A tax filing status for individuals who are unmarried and provide more than half of the financial support for their household.