If a New Government Adopted Some Ill-Advised Regulations Causing the Economy

question 37

Multiple Choice

If a new government adopted some ill-advised regulations causing the economy to be less efficient ________.

• A)the ensuing negative supply shock would lead to an immediate rise in inflation
• B)in the short-run this would create a negative output gap but eventually the previous general equilibrium would be restored by subsequent rightward shifts of the AS curve
• C)there would be no permanent changes in output and inflation
• D)all of the above
• E)none of the above

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Definitions:

Unity

100%, or 1.

LC Parallel Circuits

Circuits that contain both inductors (L) and capacitors (C) arranged in parallel, affecting the circuit's total impedance and resonance.

Tank

A container designed to hold liquids or gases at a pressure different from the ambient pressure.

Capacitive VARs

Units of reactive power in an electrical system associated with capacitive loads, contributing to the total power in VARs (volt-ampere reactive).