Consider an Economy Initially at Long-Run Equilibrium with Output (Y)equal

question 96

Multiple Choice

Consider an economy initially at long-run equilibrium with output (Y) equal to potential output (Y*) .If the SRAS is positively sloped,then a shift to the left of the AD curve will lead to ___________ in the price level,in the short run.In the long run,the SRAS curve will shift to the ___________ and the equilibrium will be at __________.

• A) an increase;left;Y = Y*
• B) a decrease;right;Y = Y*
• C) no change;left;Y = Y*
• D) an increase;right;Y < Y*
• E) a decrease;left;Y = Y*

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced by a country in a given year, reflecting the true economic output.

More Than Doubled

"More than doubled" describes a scenario where an amount or value increases by more than 100% of its original value.

CPI

The CPI (Consumer Price Index) is a metric that tracks the average fluctuation in prices that urban consumers experience for a selection of consumer goods and services over time.

Base Year

A specific year against which economic or financial data is measured and compared to track growth, inflation, or other economic indicators.