Exhibit 10.4 -Refer to Exhibit 10.4, Which Shows an Aggregate Demand-Aggregate Supply

Multiple Choice

Exhibit 10.4

-Refer to Exhibit 10.4, which shows an aggregate demand-aggregate supply model. Which of the following will be true of an economy in the long run that is at point M in the short run?

A) The actual price level will be lower than the expected price level.
B) The actual output will fall short of the potential output.
C) The short-run aggregate supply curve will remain stable at SRAS₁₀₀.
D) The short-run aggregate supply curve will shift to SRAS₁₀₉.
E) Real GDP will be equal to nominal GDP.