Scenario 14-1 The Economy Is in Long-Run Equilibrium. Suddenly, Due to Improved

question 71

Multiple Choice

Scenario 14-1
The economy is in long-run equilibrium. Suddenly, due to improved international relations, a boom experienced by a major trading partner, and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
-Refer to the Scenario 14-1. How does the new long-run equilibrium differ from the original one?

• A) Both the price level and real GDP are higher.
• B) Both the price level and real GDP are lower.
• C) The price level is the same and real GDP is higher.
• D) The price level is higher and real GDP is the same.

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