Suppose the Economy Is in Long-Run Equilibrium

question 29

Multiple Choice

Suppose the economy is in long-run equilibrium.If there is a sharp decline in government purchases combined with a significant increase in immigration of skilled workers,then in the short run,

• A)real GDP will rise and the price level might rise,fall,or stay the same.In the long-run,real GDP will rise and the price level might rise,fall,or stay the same.
• B)the price level will fall,and real GDP might rise,fall,or stay the same.In the long-run,real GDP and the price level will be unaffected.
• C)the price level will rise,and real GDP might rise,fall,or stay the same.In the long run,real GDP will rise and the price level will fall.
• D)the price level will fall,and real GDP might rise,fall,or stay the same.In the long run,real GDP will rise and the price level will fall.