Pessimism Suppose the Economy Is in Long-Run Equilibrium. Then Because of of Corporate

question 106

Multiple Choice

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.


-Refer to Optimism.How is the new long-run equilibrium different from the original one?

• A)both price and real GDP are higher
• B)both price and real GDP are lower.
• C)the price level is the same and GDP is higher.
• D)the price level is higher and real GDP is the same.

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Definitions:

Supplies Account

An account used to track the costs of small items or materials that are used in the operations of a business.

Adjusting Journal Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period, ensuring the financial statements reflect accurate and up-to-date information.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired.

Depreciation Expense

Spreading the expense of a tangible asset over the period it's expected to be used.