According to the AD-AS Model,if the Economy Is Initially at Its

question 109

Multiple Choice

According to the AD-AS model,if the economy is initially at its long-run potential growth rate,then a temporary increase in the growth rate of investment spending will cause:

• A) an increase in the real growth rate in the long run.
• B) an increase in the inflation rate in the long run.
• C) an increase in both the inflation and real growth rates in the short run.
• D) no effect on real growth rate or inflation in the short run.

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