Suppose the Economy Is in Long-Run Equilibrium

Multiple Choice

Suppose the economy is in long-run equilibrium. In a short span of time, there is a decline in the money supply, a tax increase, a pessimistic revision of expectations about future business conditions, and a rise in the value of the dollar. In the short run, what would we expect to happen?

A) The price level and real GDP will both rise.
B) The price level and real GDP will both fall.
C) The price level and real GDP will both stay the same.
D) The price level will increase, and the real GDP will fall.