If the Economy Is Initially at Long-Run Equilibrium and Aggregate

question 87

Multiple Choice

If the economy is initially at long-run equilibrium and aggregate demand declines,then in the long run the price level

• A)and output are higher than in the original long-run equilibrium.
• B)and output are lower than in the original long-run equilibrium.
• C)is lower and output is the same as the original long-run equilibrium.
• D)is the same and output is lower than in the original long-run equilibrium.

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Definitions:

Arousal Theory

The theory suggesting that people are motivated to maintain an optimal level of arousal for their best performance.

Homeostasis

The regulatory process by which biological systems maintain stability while adjusting to changing external conditions.

Drive Reduction

A theory suggesting that motivation arises from the desire to reduce physical needs, such as hunger or thirst, thereby maintaining homeostasis.

Physiological Need

A physiological need is a basic bodily requirement that humans must satisfy to maintain health and survival, such as the need for food, water, and sleep.