The Economy Is Initially in Long-Run Equilibrium

question 46

Multiple Choice

The economy is initially in long-run equilibrium.Expectations are adaptive,prices and wages are flexible,and there is an unanticipated increase in aggregate demand.In the short run,the price level will be __________ than it was in long-run equilibrium and Real GDP will be __________ than it was in long-run equilibrium.

• A) higher; lower
• B) lower; higher
• C) lower; lower
• D) higher; higher

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Definitions:

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