Consider the AD/AS Model After Factor Prices Have Fully Adjusted

question 83

Multiple Choice

Consider the AD/AS model after factor prices have fully adjusted to output gaps.An increase in the level of potential output,with aggregate demand constant,will

• A)affect only the price level.
• B)decrease real GDP and the price level.
• C)affect only the level of real GDP.
• D)increase real GDP and lower the price level.
• E)decrease real GDP and raise the price level.

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Definitions:

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