UNIT 03 / NATIONAL INCOME AND PRICE DETERMINATION

Long-Run Self-Adjustment3.7 test

100 questions with explanations after each answer.

Practice mode

QUESTION 01 / 100Easy

According to MOD-2.I.1, in the long run and in the absence of government policy actions, what restores the economy to full employment after a macroeconomic shock?

Select one answerAThe central bank lowers interest rates until real GDP reaches potentialBThe LRAS shifts left or right to match wherever the AD-SRAS intersection occursCAggregate demand automatically returns to its pre-shock level without any adjustmentDWage and price adjustment shifts SRAS until equilibrium returns to YfEThe government automatically increases spending to close any output gap

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Question 1