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

question 70

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 Pessimism.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 lower.
• D)the price level is lower and real GDP is the same.

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Definitions:

Noncash Assets

Assets that cannot be quickly converted into cash, such as real estate, equipment, and inventory.

Liabilities

Financial obligations or debts owed by a business to external parties or individuals.

Salary Allowance

A fixed amount of money paid at regular intervals to an employee, often as a benefit over their standard salary.

Interest Allowance

A deduction or allocation of interest expense, often related to tax calculations or financial assistance programs.