Beginning at Long-Run Equilibrium in the Dynamic Model of Aggregate

question 109

Multiple Choice

Beginning at long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, in the period in which a positive supply shock occurs, output _____ and inflation _____.

• A) increases; increases
• B) increases; decreases
• C) decreases; decreases
• D) decreases; increases

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Definitions:

Introduction

The initial section or beginning part of a document, speech, book, or any piece of writing that gives an overview and prepares the audience for the information to follow.

Firm

A business organization that sells goods or services in pursuit of profits.

Equilibrium Wage

The wage rate at which the quantity of labor supplied equals the quantity of labor demanded.

Structural Unemployment

Unemployment that results from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand.