Consider an Economy Starting from a Position of Full Employment

question 53

Multiple Choice

Consider an economy starting from a position of full employment. Which one of the following changes does not occur as a result of an increase in aggregate demand?

• A)The price level rises.
• B)Real GDP increases in the short run.
• C)An inflationary gap arises.
• D)Factor prices rise in the long run, shifting the short-run aggregate supply curve to the left.
• E)The long-run aggregate supply curve shifts rightward to create the new long-run equilibrium.

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