Multiple Choice
Use the following to answer questions .
Exhibit: Using the Aggregate Demand/Aggregate Supply Model 1 
-(Exhibit: Using the Aggregate Demand/Aggregate Supply Model 1) Suppose the economy is initially at A. Now suppose an increase in government purchases shifts the aggregate demand curve to AD2. Which of the following is false about the economy after it adjusts to its new long-run equilibrium?
A) Nominal wages increase.
B) The price level rises to Pd.
C) Firms employ more workers than in the short-run equilibrium.
D) There is some frictional and structural unemployment.
Correct Answer:
Verified
Correct Answer:
Verified
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