Suppose the Economy Begins in a Long-Run Equilibrium with Y

question 111

Multiple Choice

Suppose the economy begins in a long-run equilibrium with Y = Y*.A permanent increase in aggregate demand will have its short-run effect on real GDP reversed in the long run with a ________ shift of ________.

• A)rightward; the aggregate supply curve
• B)rightward; the aggregate demand curve
• C)leftward; the aggregate supply curve
• D)leftward; the aggregate demand curve
• E)rightward; Y*

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Definitions:

Fundamental Attribution Errors

A cognitive bias where individuals overemphasize personal characteristics in explaining others' behavior neglecting situational factors.

Public Policy Reasons

Justifications or rationales based on the public good or societal interests that guide or influence legislative, governmental, or organizational decisions.

Disaffirm

The act of rejecting or renouncing a contract or agreement, particularly by a minor who is not legally bound by contracts.

Life Insurance

A contract between an insurer and a policyholder where the insurer pledges payment of a death benefit to named beneficiaries upon the death of the insured.