Consider an AD/AS Model in Long-Run Equilibrium

question 64

Multiple Choice

Consider an AD/AS model in long-run equilibrium.An output gap,caused by a leftward shift of the AD curve,will be eliminated if

• A)wages rise quickly.
• B)the AS curve shifts upward.
• C)wages and other factor prices fall sufficiently.
• D)real national income decreases.
• E)prices rise quickly.

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Definitions:

Hot Climates

Refers to regions of the world characterized by high temperatures for most of the year.

Colder Climates

Regions with lower average temperatures, often characterized by longer winters and shorter summers, affecting living conditions and lifestyle.

Basal Metabolic Rate

The pace at which energy is consumed by the body in a resting state to support crucial processes such as respiration and maintaining body heat.

Energy Expenditure

The total amount of energy used by the body, encompassing basal metabolic rate, physical activity, and energy used in digestion and absorption of food.