The Aggregate Demand Aggregate Supply Model Mcqs


Q.  Suppose the economy is initially in long run equilibrium Then suppose there is a drought that destroys much of the wheat crop if policymakers allow the economy to adjust to long-run equilibrium on its own, according to the model to aggregate demand and aggregate supply what happens to prices and output in the long run ?

a. Output rises; prices are unchanged from the initial value
b. Output and the price level are unchanged from their initial values
c. Output falls; prices are unchanged from the initial value
d. Prices fall; output is unchanged from its initial value


ANSWER: See Answer
 
No explanation is available for this question!
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