Suppose the Economy Is in Long-Run Equilibrium and the Government

question 51

Multiple Choice

Suppose the economy is in long-run equilibrium and the government decreases its expenditures.Which of the following helps explain the logic of why the economy moves back to long-run equilibrium?

• A)as people revise their price-level expectations upward,firms and workers strike bargains for higher nominal wages.
• B)as people revise their price-level expectations upward,firms and workers strike bargains for lower nominal wages.
• C)as people revise their price-level expectations downward,firms and workers strike bargains for higher nominal wages.
• D)as people revise their price-level expectations downward,firms and workers strike bargains for lower nominal wages.

---

Definitions:

Undivided Interest

A share in property ownership rights where each owner's portion is not physically divided from the others.

Fixed-Term Tenancy

A legal agreement in which a property is leased for a specific period of time.

Express Contract

A legally binding agreement where the terms are clearly stated either verbally or in writing by the parties involved.

Fee Simple Absolute

The most complete ownership in property, unlimited in duration, inheritable, and without conditions or obligations.