Consider an AD/AS Model in Long-Run Equilibrium

question 64

Multiple Choice

Consider an AD/AS model in long-run equilibrium.An output gap,caused by a leftward shift of the AD curve,will be eliminated if

• A)wages rise quickly.
• B)the AS curve shifts upward.
• C)wages and other factor prices fall sufficiently.
• D)real national income decreases.
• E)prices rise quickly.

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