In the View of Real-Business-Cycle Theory, an Increase in the Long-Run

question 14

Multiple Choice

In the view of real-business-cycle theory, an increase in the long-run aggregate supply would lead to a(n) :

• A) Increase in aggregate demand by an equal amount, so real output would increase and the price level would be unchanged
• B) Increase in aggregate demand by an equal amount, so real output and the price level would increase
• C) Decrease in aggregate demand, so real output would increase and the price level would decrease
• D) Decrease in aggregate demand, so real output and the price level would increase

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