After a Positive Demand Shock,what Are the Expected Long-Run Adjustments

question 14

Multiple Choice

After a positive demand shock,what are the expected long-run adjustments?

• A) Wages fall,price level falls,and output falls back to potential.
• B) Wages rise,price level rises,and output falls back to potential.
• C) Wages fall,price level rises,and output rises back to potential.
• D) Wages rise,price level falls,and output falls back to potential.
• E) Wages rise,price level rises,and output rises.

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Definitions:

Economic Profit

The disparity between a company's complete earnings and its aggregate expenses, covering both direct (explicit) and indirect (implicit) costs.

Human Capital

The collective skills, knowledge, and experiences possessed by an individual or population, viewed in terms of their value to an organization or society.

Physical Capital

Physical capital includes tangible assets such as buildings, machinery, and equipment that are used in the production of goods and services.

Productive Investment Opportunities

Investments that potentially lead to an increase in productive capacity and economic growth.