Starting from Long-Run Equilibrium, Without Policy Intervention, the Long-Run Impact

question 66

Multiple Choice

Starting from long-run equilibrium, without policy intervention, the long-run impact of an adverse supply shock is that prices will:

• A) be permanently higher and output will be restored to the natural rate.
• B) return to the old level and output will be restored to the natural rate.
• C) be permanently higher and output will be permanently lower.
• D) return to the old level, but output will be permanently lower.

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Definitions:

Ideological Reasoning

The process of thinking that is heavily influenced by a predetermined set of beliefs or ideology.

Economic Growth

An increase in the production of goods and services over a specific period, often measured by GDP.

Ideological Reasoning

Reasoning guided by a set of beliefs or a specific ideology rather than empirical evidence or logical analysis.

Ethical Violation

An action that goes against moral principles, values, or ethical standards, often leading to disapproval or sanctions.