Ask Question
BusinessBusiness
12 May, 03:27

Pessimism Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. Refer to Pessimism. In the short run what happens to the price level and real GDP? A. The price level rises and real GDP falls. B. The price level falls and real GDP rises. C. Both the price level and real GDP fall. D. Both the price level and real GDP rise.

+2
Answers (1)
  1. 12 May, 05:11
    0
    The correct answer is option C.

    Explanation:

    Suppose there is pessimism in an economy because of corporate scandals, international tensions, loss of confidence, etc. This is going to adversely affect the economy. Because of corporate scandals, the investment will decline. Loss of confidence in consumers will cause a reduction in consumption spending. International tensions cause net exports to decline.

    All of this causes aggregate demand to decline. The aggregate demand curve moves to the left. This leftward shift causes both the quantity of output and price to fall. As output fall real GDP will decline as well.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Pessimism Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Publicity tools are Multiple Choice A. methods used to get a nonpersonal, directly paid presentation of a company or its products. B. short-term inducements of value offered to arouse interest in buying a product or service. C.
Answers (1)
The following transactions occur for the Panther Detective Agency during the month of July: a. Purchase a truck and sign a note payable, $14,100. b. Purchase office supplies for cash, $510. c. Pay $710 in rent for the current month.
Answers (1)
Mr. Jackson purchases a home for $90,000. He paid $4,000 as an earnest money deposit, and is obtaining an 80% loan. Costs include $250 for title insurance, recording fees of $60, and a tax proration fee of $430. Mr.
Answers (1)
Why will the face value of a bill of currency never change? A. the inflation rates are controlled B. the government won't let it change C. the value is printed on the bill
Answers (2)
The process of securing a loan by pledging a property without giving up ownership of the property is called
Answers (1)
New Questions in Business
On march 25, 1911, a fire in the triangle shirtwaist factory in new york city claimed the lives of 146 female workers.
Answers (1)
True or false: economizing behavior involves choosing the option that brings the greatest satisfaction at the least cost.
Answers (1)
A person believes that real equality can only exist when political equality is coupled with economic equality. This person believes that democratic means should be used to distribute wealth evenly throughout society. This person is a socialist. T/F
Answers (1)
Determine the cost of merchandise sold for the transaction on September 25 using the perpetual inventory system and the FIFO method.
Answers (1)
Venus Robotics can produce 23,000 robots a year on its daytime shift. The fixed manufacturing costs per year are $2 million and the total labor cost is $9,109,000.
Answers (1)
Home » Business » Pessimism Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some
Sign Up Forgot Password?