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Consider an Economy Starting from a Position of Full Employment

Question 25

Multiple Choice

Consider an economy starting from a position of full employment. Which one of the following occurs as a result of an advance in technology?


A) The price level falls.
B) Real GDP decreases in the short run.
C) An inflationary gap arises.
D) Factor prices rise in the long run, shifting the short-run aggregate supply curve leftward.
E) The long-run aggregate supply curve shifts leftward to create the new long-run equilibrium.

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