When the Economy Is Operating on the LRAS Curve,then Expansionary

question 23

Multiple Choice

When the economy is operating on the LRAS curve,then expansionary fiscal policy will

• A)generate higher prices in the short run,but will induce aggregate supply to increase in the long run.
• B)generate an increase in real national income and higher prices in both the short run and the long run.
• C)generate an increase in real national income without higher prices in the short run,but then real national income will return to its long-run level and the price level will increase.
• D)generate an increase in real national income and higher prices in the short run,but then real national income will decrease to its long-run level and the price level will increase some more.

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