Author Question: In response to an increase in AD: a. The price level will increase more in the long run than in the ... (Read 56 times)

Engineer · **on:** Jun 30, 2018

In response to an increase in AD:
a. The price level will increase more in the long run than in the short run.
b. Real output will increase more in the long run than in the short run.
c. Both the price level and real output will increase more in the long run than in the short run.
d. Neither the price level nor real output will change in the long run.

Question 2

If the spending multiplier equals 6 and equilibrium real GDP is 32 billion below potential real GDP, then total planned expenditures need to decrease by approximately 5.33 billion to close the recessionary gap.
a. True
b. False
Indicate whether the statement is true or false