The Economy Is in Long-Run Equilibrium

question 22

Multiple Choice

The economy is in long-run equilibrium. Suppose that automatic teller machines become cheaper and more convenient to use, and as a result the demand for money falls. Other things being equal, what would we expect will happen to the price level and real GDP in the short and long run?

• A) In the short run, the price level and real GDP would rise, but in the long run they would both be unaffected.
• B) In the short run, the price level and real GDP would rise, but in the long run the price level would rise and real GDP would be unaffected.
• C) In the short run, the price level and real GDP would fall, but in the long run they would both be unaffected.
• D) In the short run, the price level and real GDP would fall, but in the long run the price level would fall and real GDP would be unaffected.

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Definitions:

Enmeshed Family Pattern

A family system in which members are overinvolved with each other’s affairs and overconcerned about each other’s welfare.

Salvador Minuchin

A notable psychiatrist known for his work in family therapy and the development of structural family therapy.

Weight Set Point

The theory that the body has a natural or optimal weight that it strives to maintain through its metabolic and physiological mechanisms.

Hypothalamic Activity

Pertains to the actions or functions of the hypothalamus, a small region of the brain that regulates many bodily functions including hunger, thirst, and temperature.