Suppose Canada's Economy Is in a Long- Run Equilibrium with Real

question 37

Multiple Choice

Suppose Canada's economy is in a long- run equilibrium with real GDP equal to potential output. Now suppose there is a decrease in the Canadian price of all imported raw materials. In the short run, . In the long run, .

• A)real GDP and the price level both rise; real GDP returns to its original level with a higher price level
• B)real GDP rises and the price level falls; real GDP and the price level return to their original levels
• C)real GDP and the price level both fall; real GDP is below its original level with a lower price level
• D)real GDP falls and the price level rises; real GDP is below its original level with a higher price level
• E)real GDP and the price level both rise; real GDP is above its original level with a higher price level

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