Suppose the Economy Is in Long-Run Equilibrium

question 19

Multiple Choice

Suppose the economy is in long-run equilibrium.Concerns about pollution cause the government to significantly restrict the production of electricity.At the same time,taxes fall.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:

Associations

Connections or relationships between thoughts, ideas, or concepts.

Unconscious

According to Freud, a reservoir of mostly unacceptable thoughts, wishes, feelings, and memories. According to contemporary psychologists, information processing of which we are unaware.

Serial Position Effect

A phenomenon in memory that suggests people tend to recall the first and last items in a series best, and the middle items worst.

Recall Best

The tendency to remember and bring to mind the most significant or vivid memories more easily than others.