Multiple Choice
Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP.Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?
A) Output will increase.
B) Prices will decline.
C) Unemployment will decline.
D) Wages will rise.
E) The exchange rate will rise.
Correct Answer:
Verified
Correct Answer:
Verified
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