Consider the Basic AD/AS Macro Model in Long-Run Equilibrium

question 53

Multiple Choice

Consider the basic AD/AS macro model in long-run equilibrium.A negative AS shock will ________ the price level and ________ output in the short run.In the long run,the price level will ________ and output ________.

• A)decrease; decrease; decrease further; will decrease further
• B)decrease; decrease; decrease further; will be restored to potential output
• C)increase; decrease; decrease; will be restored to potential output
• D)increase; decrease; increase further; will be restored to potential output
• E)increase; increase; increase further; will be restored to potential output

---

Definitions:

Sales Revenues

The income generated from the sale of goods or services before any costs or expenses are deducted.

Cash Operating Expenses

Expenses incurred during the normal course of business operations, including salaries, rent, and utilities, but excluding non-cash expenses like depreciation.

Technologically Obsolete

A state where a product or service is no longer considered useful or efficient due to advancements in technology.

Simple Rate Of Return

A financial metric that measures the incremental profit or savings from an investment as a percentage of the investment's initial cost.