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

question 300

Multiple Choice

Suppose that the economy is in long-run equilibrium and the government decided to engage in expected expansionary policy by increasing the money supply. If we assume rational expectations, which of the following statements is correct about the effect of expansionary policy in the long run?

• A) The unemployment rate will increase, real GDP will increase and the price level will increase.
• B) The unemployment rate will decrease, real GDP will decrease and the price level will decrease.
• C) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will increase.
• D) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will decrease.

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Definitions:

Participation And Involvement

The act of taking part actively and being involved in activities or discussions, contributing to decision-making processes.

Organizational Diagnosis

Organizational diagnosis involves analyzing an organization's current state to identify strengths, weaknesses, and areas for improvement, often leading to strategic change.

Resistance To Change

The act of opposing or struggling with modifications or transformations that alter the status quo in an organization or individual life.

Resistance To Change

The opposition or reluctance to modify or abandon traditional practices or to adapt to new ones.