Suppose the Closed Economy Is in Long-Run Equilibrium

question 26

Multiple Choice

Suppose the closed economy is in long-run equilibrium. Technological change shifts the long-run aggregate-supply curve $80 billion to the right. At the same time, government purchases increase by $40 billion. If the MPC equals 0.75 and the crowding-out effect is $70 billion, what would we expect to happen in the long-run to real GDP and the price level?

• A) Both real GDP and the price level would be higher.
• B) Both real GDP and the price level would be lower.
• C) Real GDP would be higher but the price level would be lower.
• D) Real GDP would be higher but the price level would be the same.

---

Definitions:

Caregiver Role Strain

The stress and burden experienced by caregivers due to the demands of caring for a dependent individual.

Impaired Home Maintenance

A nursing diagnosis referring to a situation where an individual is unable to independently manage and maintain their living environment.

Interrupted Family Processes

A nursing diagnosis referring to a change or disruption in the family's usual activities, roles, or communication patterns that can affect the health status of its members.

Bedridden

Unable to leave bed due to illness, injury, or disability.