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.How is the new long-run equilibrium different from the original one?
A)both price and real GDP are higher.
B)both price and real GDP are lower.
C)the price level is the same and GDP is lower.
D)the price level is lower and real GDP is the same.

Question

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.How is the new long-run equilibrium different from the original one?
A)both price and real GDP are higher.
B)both price and real GDP are lower.
C)the price level is the same and GDP is lower.
D)the price level is lower and real GDP is the same.

Quizplus · Accepted Answer

The Answer of 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.How is the new long-run equilibrium different from the original one?
A)both price and real GDP are higher.
B)both price and real GDP are lower.
C)the price level is the same and GDP is lower.
D)the price level is lower and real GDP is the same.

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