Suppose That the Economy Is Initially in a Long-Run Macroeconomic

question 77

Multiple Choice

Suppose that the economy is initially in a long-run macroeconomic equilibrium.A shock then hits the economy and we observe that the unemployment rate increases and the price level decreases.We can conclude that ________ has decreased and there is now a(n) ________ gap.

• A)aggregate supply; inflationary
• B)aggregate demand; recessionary
• C)aggregate supply; recessionary
• D)aggregate demand; inflationary

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Definitions:

Income Statement

A financial document that shows a company's income, expenses, and net profit over a specified period.

Dividend Payout Ratio

The percentage of earnings paid to shareholders in dividends, indicating how much money a company returns to shareholders versus reinvesting in itself.

Par Value

The face value of a bond or stock, representing the amount that the issuer agrees to pay at maturity, or the nominal value of a share.

Common Stock

A type of equity security that represents ownership in a corporation and entitles holders to vote on company matters.