Suppose That the Economy Is at Long-Run Equilibrium

question 60

Multiple Choice

Suppose that the economy is at long-run equilibrium.If there is a sharp rise in the stock market combined with a significant increase in the minimum wage,then in the short run

• A)real GDP will rise and the price level might rise,fall,or stay the same.
• B)real GDP will fall and the price level might rise,fall,or stay the same.
• C)the price level will rise,and real GDP might rise,fall,or stay the same.
• D)the price level will fall,and real GDP might rise,fall,or stay the same.

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Definitions:

Payments

Transactions involving the transfer of money in exchange for goods, services, or to fulfill a legal obligation.

Miller-Orr Model

The Miller-Orr Model is a financial model used to manage cash flow and determine the optimal balance between holding cash and investing in securities.

Opportunity Rate

The rate of return of a foregone investment compared to the potential return on the chosen investment.

Net Float

The difference between checks written against and deposited in an account, reflecting the time lag between writing a check and clearing it.