After a negative demand shock, what are the expected long-run adjustments?
a. Wages rise, price level rises, and output falls back to potential
b. Wages fall, price level rises, and output falls back to potential
c. Wages fall, price level falls, and output increases back to potential
d. Wages fall, price level rises, and output increases back to potential
e. Wages rise, price level falls, and output increases back to potential
C
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How will a recession in the economies of our foreign trading partners affect US AD?
A. no effect on AD B. AD will increase C. AD will decrease D. depends on whether US offers financial aid to these countries
Which of the following is an example of a normative, as opposed to positive, statement?
a. If the price of a product decreases, people's willingness to buy that product will increase. b. Reducing tax rates on the wealthy would benefit the nation. c. If the national saving rate were to increase, so would the rate of economic growth. d. The elimination of trade restrictions would increase an economy's standard of living.