Recession in Canada:A recession occurs in Canada.Suppose initially the US economy is in a long-run equilibrium.

How is the new long-run equilibrium different from the original one in the absence of any policy interventions?

a. the price level and real GDP are higher.

b. the price level and real GDP are lower.

c. the price level is permanently lower and real GDP is the same.

d. the price level and real GDP are the same.

Recession in Canada:A recession occurs in Canada.Suppose initially the US economy is in a long-run equilibrium.

Suppose policy makers respond to the recession in Canada to stabilize the economic fluctuation. How is the new long-run equilibrium different from the original one with the government intervention (monetary or fiscal policy)?

a. the price level and real GDP are higher.

b. the price level and real GDP are lower.

c. the price level is higher and real GDP is the same.

d. the price level and real GDP are the same.

Oil Shock:Suppose in 2016 OPEC countries decreased their production of oil. Assume further that the US economy initially in a long-run equilibrium. For simplicity, the long-run aggregate supply curve is assumed to be constant.

How is the new long-run equilibrium different from the original one in the absence of any policy interventions?

a. the price level and real GDP are higher.

b. the price level and real GDP are lower.

c. the price level is permanently higher and real GDP is the same.

d. the price level and real GDP are the same.

Oil Shock:Suppose in 2016 OPEC countries decreased their production of oil. Assume further that the US economy initially in a long-run equilibrium. For simplicity, the long-run aggregate supply curve is assumed to be constant.

Suppose policy makers respond to the oil shock to stabilize the economic fluctuation. How is the new long-run equilibrium different from the original one with the government intervention (monetary or fiscal policy)?

a. the price level and real GDP are higher.

b. the price level and real GDP are lower.

c. the price level is permanently higher and real GDP is the same.

d. the price level and real GDP are the same.