Consider an Economy in Equilibrium, and Assume No Change in Aggregate

question 35

Multiple Choice

Consider an economy in equilibrium, and assume no change in aggregate demand.An earthquake that destroys many factories across the country would result in a(n) :

• A)increase in the average price level and a decrease in real GDP.
• B)increase in the average price level and no change in real GDP.
• C)increase in the average price level and an increase in real GDP.
• D)decrease in the average price level and an increase in real GDP.
• E)decrease in the average price level and a decrease in real GDP.

---

Definitions:

Canceling-out Theory

A hypothesis suggesting that effects in one direction are neutralized or mitigated by effects in an opposing direction.

Natural Selection

The process by which organisms that are better adapted to their environment tend to survive and produce more offspring, thus driving the evolution of species.

Depth Cues

Visual or auditory information that helps to determine the distance between the observer and objects in the environment.

Redundancy

The inclusion of extra components or information that are not necessary for functioning, often to ensure reliability or convey additional confirmation.