In the View of Real-Business-Cycle Theory, an Increase in the Long-Run

question 36

Multiple Choice

In the view of real-business-cycle theory, an increase in the long-run aggregate supply would lead to a(n)

• A) increase in aggregate demand by an equal amount, so real output would increase and the price level would be unchanged.
• B) increase in aggregate demand by an equal amount, so real output and the price level would increase.
• C) decrease in aggregate demand, so real output would increase and the price level would decrease.
• D) decrease in aggregate demand, so real output and the price level would increase.

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