The correct option depicting the impact of LRAS and
Answer to Problem 7MCQ
Option e is correct.
Explanation of Solution
Explanation for the correct option:
e.
There is no change in LRAS and no change in Long run growth. As the breakout of the flu is short-term, there is a temporary change in the market but there is no effect on long-run economic growth. Therefore, option e is the correct answer.
Explanation for incorrect options:
a.
Shifting the LARS towards the right and left will be temporary as in long run it will not influence growth. Therefore, option a is incorrect.
b.
There will be no change in the long-run
c.
Any shift in supply will be temporary and it does not affect the long-run
d.
Long-run growth will remain unchanged as the flu outbreak occurred for the short term. Therefore, option d is incorrect.
International trade: International trade is an exchange of goods and services across nations. This is due to globalization and
Chapter 45 Solutions
Krugman's Economics For The Ap® Course
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