Suppose That the Current Price Level Is 110, Real GDP

question 103

Multiple Choice

Suppose that the current price level is 110, real GDP is $100 billion, and long-run aggregate supply is $95 billion. We can conclude that

• A) the price level will fall until long-run aggregate supply shifts to $100 billion.
• B) the price level will fall and input prices will rise until real GDP pulls long-run aggregate supply up to $100 billion.
• C) input prices will rise until real GDP is $95 billion.
• D) aggregate demand will increase until both short-run and long-run aggregate supply equal $100 billion.

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Definitions:

Theory Of Mind

The capability to understand and attribute various mental states like beliefs, intentions, desires, emotions, and knowledge to both oneself and others, acknowledging the diversity in others' beliefs, desires, and intentions from one's own.

Tease

To make fun of or attempt to provoke in a playful or unkind manner.

Empathize

The ability to understand and share the feelings of another.

Egocentric Child

A developmental stage in children where they perceive, understand, and interpret the world primarily from their own perspective.