Suppose Canada's Economy Is in a Long-Run Equilibrium with Real

question 91

Multiple Choice

Suppose Canada's economy is in a long-run equilibrium with real GDP equal to potential output.Now suppose there is an unexpected and sharp reduction in desired business investment expenditure.In the short run,________.In the long run,________.

• A)real GDP and the price level both fall; real GDP is at its original level with a lower price level
• B)real GDP and the price level both fall; real GDP is above its original level with a higher price level
• C)real GDP and the price level both rise; real GDP returns to its original level with a higher price level
• D)real GDP rises and the price level falls; real GDP returns to its original level with a lower price level
• E)real GDP falls and the price level rises; real GDP is below its original level with a higher price level

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Definitions:

Specific Learning Disorder

A type of neurodevelopmental disorder that hinders the ability to learn or use specific academic skills, such as reading or mathematics.

Autism Spectrum Disorder

A developmental disorder characterized by difficulties in social interaction, communication, and by restricted and repetitive behaviors.

Multifinality

The principle in developmental psychology that similar early experiences can lead to different outcomes in individuals.

Equifinality

A principle from systems theory suggesting that different actions in a given context can lead to the same outcome.