If an Unanticipated Increase in Aggregate Demand Results in an Output

question 138

Multiple Choice

If an unanticipated increase in aggregate demand results in an output beyond the economy's long-run capacity, long-run equilibrium will eventually be restored by

• A) an increase in the economy's productive capacity (LRAS shifts to the right).
• B) higher resource prices, an increase in SRAS, and a decrease in the general level of prices.
• C) higher resource prices, a decrease in SRAS, and an increase in the general level of prices.
• D) a decrease in the natural rate of unemployment.

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