What happens to prices and output in the long run? Suppose the - ProProfs Discuss
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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

This question is part of Macroeconomics [Ch. 2
Asked by Emy_, Last updated: May 21, 2020

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1 Answer

John Smith

John Smith

Answered Jun 19, 2017

Output and the price level are unchanged from their initial values
 

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