Figure 7-3 -Employing Figure 7-3 Above with Equilibrium Initially at E₀,assume the Initially

question 101

Multiple Choice

Figure 7-3

-Employing Figure 7-3 above with equilibrium initially at E₀,assume the nominal money supply eased.If prices are flexible,in the short run ________ and in the long run ________.

• A)prices and output rise as in E₂;output remains at 3000
• B)prices and output remain at E₀;output changes to 2500
• C)prices and output rise,E₀ to E₂;output returns to E₃
• D)None of the above.

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