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

question 23

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 increases.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

---

Definitions:

Quick Ratios

A measure of a company's ability to meet its short-term obligations with its most liquid assets, providing insights into financial health.

Debt Management Ratios

Financial ratios that indicate the degree to which a company is financed by debt and its ability to repay it.

Financial Leverage

The use of borrowed funds to increase the potential return of an investment.

Managers

Individuals in an organization responsible for controlling or administering all or part of a company or similar organization.