Suppose the Canadian Economy Is Producing at the Natural Rate

Multiple Choice

Suppose the Canadian economy is producing at the natural rate of output. An appreciation of the Canadian dollar will cause ________ in real GDP in the short run and ________ in the aggregate price level in the long run, everything else held constant. (Assume the appreciation causes no effects in the supply side of the economy.)

A) an increase; an increase
B) a decrease; a decrease
C) no change; an increase
D) no change; a decrease