Figure 7-3 -Employing Figure 7-3 Above with Equilibrium Initially at E₀,assume the Initially

Multiple Choice

Figure 7-3

-Employing Figure 7-3 above with equilibrium initially at E₀,assume the nominal money supply eased.If prices are flexible,in the short run ________ and in the long run ________.

A) prices and output rise as in E₂;output remains at 3000
B) prices and output remain at E₀;output changes to 2500
C) prices and output rise,E₀ to E₂;output returns to E₃
D) None of the above.