Starting from Long-Run Equilibrium,if the Public Anticipates That Policymakers Will

question 34

Multiple Choice

Starting from long-run equilibrium,if the public anticipates that policymakers will increase aggregate demand by less than policymakers do increase aggregate demand,and if the short-run aggregate supply curve fully adjusts to the (incorrectly) anticipated increase in aggregate demand,then Real GDP will __________ and the price level will __________.

• A) rise; rise
• B) decline; fall
• C) stay constant; rise
• D) decline; rise

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Definitions:

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors.

Resistant Patterns

Behaviors or trends showing opposition or inability to change despite attempts at intervention.

Recognizing

The act of identifying or acknowledging the existence, validity, or legality of something.

Confrontation

This involves a direct encounter between parties where disagreements or differences are addressed openly.