What happens to prices and output in the long run? Suppose the economy is initially in long-run equilibrium. Then, suppose there is a drought that destroys much of the wheat crop. Policymakers allow the economy to adjust to long-run equilibrium on its own, according to the model of aggregate demand and aggregate supply.
A. Prices rise; output is unchanged from its initial value B. Prices fall; output is unchanged from its initial value C. Output rises; prices are unchanged from the initial value D. Output falls; prices are unchanged from the initial value E. Output and the price level are unchanged from their initial values