Pessimism Suppose the Economy Is in Long-Run Equilibrium. Then Because of of Corporate

question 70

Multiple Choice

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.


-Refer to Pessimism.How is the new long-run equilibrium different from the original one?

• A)both price and real GDP are higher.
• B)both price and real GDP are lower.
• C)the price level is the same and GDP is lower.
• D)the price level is lower and real GDP is the same.

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Definitions:

Orderly Adjustments

Refers to planned and controlled changes in economic policies or conditions aimed at achieving stability or growth without causing undesirable market fluctuations.

Foreign Exchange Market

The foreign exchange market is a global decentralized marketplace for trading currencies, determining the exchange rate for different currencies.

British Pounds

The currency of the United Kingdom, widely used in Great Britain and its territories.

International Gold Standard

The International Gold Standard was a monetary system in which the value of a country's currency was directly linked to a specific amount of gold, facilitating international trade and investment stability.