Suppose That the Aggregate Demand (ADI)curve in an Economy Is

question 178

Multiple Choice

Suppose that the aggregate demand (ADI) curve in an economy is Y = 10,000 - 10,000
,current inflation (11ec9ae2_bd79_1ce7_a39a_a9c7bc0c6307_TB34225555_11 ) equals 0.03 (3%) ,and potential output (Y*) equals 9,700.If,starting from long-run equilibrium,an inflation shock raises inflation to 7%,in the short run,output will equal ________ and,in the long run,output will equal _________

• A) 9,300;9,300
• B) 9,300;9,500
• C) 9,300;9,700
• D) 9,700;9,700
• E) 9,700;9,300