Suppose the Economy Is in Equilibrium on the LRAS Curve

question 32

Multiple Choice

Suppose the economy is in equilibrium on the LRAS curve and government spending increases.In the long run

• A)prices and output will return to the original levels.
• B)prices will increase,but output will return to the original level.
• C)prices and output will increase.
• D)output will increase and prices will decrease.

---

Definitions:

Government

The governing body of a nation, state, or community, responsible for making and enforcing laws, policies, and public services.

Wage Labor

An employment system where workers are paid a fixed rate for the hours they work, as opposed to being paid a salary or owning a share of production.

Economic Independence

The condition of having sufficient personal wealth to live, without needing to work for basic necessities.

Poverty

The state of being extremely poor or lacking sufficient resources to meet basic living needs such as food, shelter, and healthcare.