If the price of tennis rackets were to increase, we would expect:
a. the demand for tennis balls to increase.
b. the demand for tennis balls to decrease.
c. the supply of tennis balls to increase, leading to a movement along the demand curve for tennis balls.
d. the supply of tennis balls to decrease.
Question 2
Starting from long run equilibrium, in response to a decrease in AD:
a. The price level will increase more in the long run than in the short run.
b. The short run equilibrium level of real output will be greater in the long run than in the short run.
c. Neither the price level nor real output will change in the long run.
d. Both a. and b. are correct
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