Question

Suppose the economy is in long-run equilibrium. If there is a sharp increase in the price of a critically important resource that is used in an economy such as oil and higher expected inflation while, at the same time, consumers become increasingly confident about their employment prospects and businesses more optimistic regarding the profitability of their investments, then we would expect that in the short-run, A. the price level will fall, and real GDP might rise, fall, or stay the same B. real GDP will fall and the price level might rise, fall, or stay the same. C. the price level will rise, and real GDP might rise, fall, or stay the same. D. real GDP will rise and the price level might rise, fall, or stay the same.

          Suppose the economy is in long-run equilibrium. If there is a sharp increase in the price of a critically important resource that is used in an economy such as oil and higher expected inflation while, at the same time, consumers become increasingly confident about their employment prospects and businesses more optimistic regarding the profitability of their investments, then we would expect that in the short-run,
A.
the price level will fall, and real GDP might rise, fall, or stay the same
B.
real GDP will fall and the price level might rise, fall, or stay the same.
C.
the price level will rise, and real GDP might rise, fall, or stay the same.
D.
real GDP will rise and the price level might rise, fall, or stay the same.

Added by Heather M.

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