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Pessimism Suppose the Economy Is in Long-Run Equilibrium. Then Because of of Corporate

Question 36

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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 Optimism.In the short run what happens to the price level and real GDP?


A) both the price level and real GDP rise.
B) both the price level and real GDP fall.
C) the price level rises and real GDP falls.
D) the price level falls and real GDP rises.

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