In Response to a Decrease in Output, the Economy Would

question 142

True/False

In response to a decrease in output, the economy would revert to its original level of prices and output whether the decrease in output was caused by a decrease in aggregate demand or a decrease in short-run aggregate supply.

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Definitions:

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers, leading to a balance without surplus or shortage.

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers, resulting in a stable labor market condition.

Immigration

The action of coming to live permanently in a foreign country.

Opportunity Cost

The expense incurred by not choosing the second-best option while making a decision.