Starting from Long-Run Equilibrium in the Dynamic Model of Aggregate

question 51

Multiple Choice

Starting from long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, a temporary five-period tax increase causes output to _____ returning to the natural level in the long run.

• A)remain continuously above the natural level of output until
• B)move above and then below the natural level of output until
• C)remain continuously below the natural level of output until
• D)move below and then above the natural level of output before

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