Scenario 14-1

question 168

Multiple Choice

Scenario 14-1. The economy is in long-run equilibrium. Suddenly, due to improved international relations and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
-Refer to Scenario 14-1. In the short run, which of the following describes the changes that take place in the economy?

• A)Both the price level and real GDP rise.
• B)Both the price level and real GDP fall.
• C)The price level rises and real GDP falls.
• D)The price level falls and real GDP rises.

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