Suppose the Economy Is in Long-Run Equilibrium

question 199

Multiple Choice

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, then we would expect that 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:

Polysaccharide

Polymer made from carbohydrate monomers; the polysaccharides starch and glycogen are polymers of glucose monomers.

Cellulose

A complex carbohydrate or polysaccharide consisting of glucose units, forming the primary structural component of plant cell walls.

Plant Cell Walls

Rigid outer layers surrounding plant cells, made primarily of cellulose, providing structure, support, and protection.

Glycogen

A form of stored glucose found in the liver and muscles; it's broken down into glucose when energy is needed.