The Economy Is Initially in Long-Run Equilibrium

Multiple Choice

The economy is initially in long-run equilibrium.Expectations are adaptive,prices and wages are flexible,and there is an unanticipated increase in aggregate demand.In the short run,the price level will be __________ than it was in long-run equilibrium and Real GDP will be __________ than it was in long-run equilibrium.

A) higher; lower
B) lower; higher
C) lower; lower
D) higher; higher