Critical analysis Q8 When actual output exceeds an economy’s full-employment output, how will the self-correcting mechanism direct the economy to long-run equilibrium? Prices will increase causing production costs, which will reduce aggregate supply. In the long run, a new equilibrium will emerge at a higher price level and an output consistent with the economy’s sustainable capacity. Weak demand will pull real wages and other costs downward, increasing profit margins and leading to an expansion of aggregate supply. In the long run, a new equilibrium will emerge at a higher price level and an output consistent with the economy’s sustainable capacity.

Which of the following is likely not a benefit of requiring a grand jury to listen to and examine all of the evidence against a person suspected of committing a serious crime and then independently deciding whether or not to hand down an indictment? 1.the grand jury system provides the accused another safeguard against being sent to trial and facing conviction based on flawed evidence. 2.the members of the grand jury are drawn from the community and are empowered to render independent decisions about whether or not the government has collected enough evidence to bring an individual to trial. 3.the grand jury’s decision can provide prosecutors insight into what is necessary to build a sufficient case if a similar crime is presented later. 4.the grand jury is impaneled to rubber-stamp prosecutors’ cases, which makes it possible for more cases to reach trial.