Suppose That You Have the Following Information About the Economy

Multiple Choice

Suppose that you have the following information about the economy, where all figures are in millions of dollars:
Full employment output =$2,000
Consumption = $1,200 Investment = $400
Government spending = $500
Net exports =-$200
Because short-run output is ________ full-employment output, in the long run we would expect the price level to ________.

A) less than; rise
B) less than; fall
C) greater than; rise
D) greater than; fall
E) equal to; remain unchanged