The Economy Is in Long-Run Equilibrium When There Is an Incorrectly

question 76

Multiple Choice

The economy is in long-run equilibrium when there is an incorrectly anticipated increase in aggregate demand brought about by expansionary monetary policy.Specifically,aggregate demand increases by less than people anticipate (bias upward) .According to new classical theory,the price level will __________ and Real GDP will __________ in the short run.In the long run,the price level will be __________ than it was before aggregate demand increased.

• A) rise; rise; lower
• B) rise; higher; fall
• C) rise; fall; higher
• D) fall; rise; lower
• E) rise; rise; higher

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Definitions:

Economically Desirable

Characteristics or actions that are considered beneficial for the economy, potentially enhancing efficiency or growth.

Private Markets

Markets where transactions are conducted directly between parties without public oversight or regulation, often relating to investments or services.

Allocate Resources

The process of distributing available resources among various projects, departments, or entities to achieve desired objectives.

Benefit Surpluses

The extra utility or satisfaction gained by consumers when the price they are willing to pay for a good or service exceeds the market price.