Multiple Choice
Suppose the current situation is such that the price level is 120, real GDP is $13 trillion, and GDP along the long- run aggregate supply curve is $12.6 trillion. What will take place to restore the long- run equilibrium?
A) The price level will fall until long- run aggregate supply increases to $13 trillion.
B) The price level will fall and money wage rates will rise until real GDP along the long- run aggregate supply curve is $13 trillion.
C) Aggregate demand will increase until both short- run and long- run aggregate supply equal $13 trillion.
D) Money wage rates will rise until real GDP is $12.6 trillion.
Correct Answer:
Verified
Correct Answer:
Verified
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