Suppose the Economy Is at a Short-Run Equilibrium GDP That

question 110

Multiple Choice

Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

• A)Output will decrease.
• B)Prices will increase.
• C)Unemployment will rise.
• D)Short-run aggregate supply will shift to the right.

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