Suppose the economy is initially in long-run equilibrium. Then suppose there is a increase in military spending due to rising international tensions. According to the model of aggregate demand and aggregate supply, what happens to prices and output in the long run?
Group of answer choices
Prices rise; output is unchanged from its initial value.
Output falls; prices are unchanged from the initial value.
Output and the price level are unchanged from their initial values
Prices fall; output is unchanged from its initial value.