Suppose the Economy Is in Long-Run Equilibrium

question 19

Multiple Choice

Suppose the economy is in long-run equilibrium.Concerns about pollution cause the government to significantly restrict the production of electricity.At the same time,taxes fall.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:

Price of Mustard

The amount of money required to purchase mustard, a condiment made from the seeds of the mustard plant, which can fluctuate based on factors like production costs and market demand.

Equilibrium Price

The cost at which the amount of a product sought by buyers matches the amount provided by sellers, achieving equilibrium in the market.

Demand for

The desire and willingness of consumers to purchase a specific quantity of goods or services at a given price over a particular period.

Mustard Recall

A situation where mustard products are withdrawn from the market due to safety concerns like contamination or mislabeling.