Suppose the Economy Is Initially Operating at Its Long Run

question 16

Multiple Choice

Suppose the economy is initially operating at its long run equilibrium. In the absence of stabilization policy,a sudden sharp reduction in exports due to recession overseas would cause

• A) an inward shift of aggregate supply, followed by a slow outward shift of aggregate demand
• B) an inward shift of aggregate demand, followed by an inward shift of aggregate supply
• C) an outward shift of aggregate demand, followed by a slow inward shift of aggregate supply
• D) a recession accompanied by inflation
• E) a relatively short recession followed by a long, slow recovery

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Definitions:

Relaxin

A hormone involved in childbirth and pregnancy, it helps to relax the uterine muscles and ligaments for delivery and affects other body parts such as the heart and blood vessels.

Testosterone Level

The concentration of the hormone testosterone in the blood, significant for developing male physical characteristics and affecting mood and libido.

Early 20s

A term referring to the period in a person’s life from age 20 to 24, characterized by transitions in career, education, and personal identity.

Sexual Arousal

A state of heightened physiological and emotional response to sexual stimuli, often leading to sexual desire.