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

question 76

Multiple Choice

Suppose Canada's economy is in a long-run equilibrium with real GDP equal to potential output.Now suppose there is a decrease in the Canadian price of all imported raw materials.In the short run,________.In the long run,________.

• A)real GDP and the price level both fall; real GDP is below its original level with a lower price level
• B)real GDP and the price level both rise; 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 and the price level return to their original levels
• 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:

Market Prices

The current value or cost of a commodity, security, or service as determined by supply and demand in the open market.

Continually Fluctuating

Refers to constant changes or instability in values, prices, or conditions, often seen in financial markets or economic indicators.

Efficient

Being efficient refers to achieving maximum productivity with minimum wasted effort or expense.

Tremendous Competition

A highly competitive market condition where numerous competitors strive intensely to win market share.