Suppose the Economy Is in Long-Run Equilibrium

question 397

Multiple Choice

Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp decline in the stock market, a tax cut, an increase in the money supply and a decline in the value of the dollar. In the short run

• A)the price level and real GDP will both rise.
• B)the price level and real GDP will both fall.
• C)neither the price leave nor real GDP will change.
• D)All of the above are possible.

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