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Starting from Long-Run Equilibrium in the Dynamic Model of Aggregate

Question 78

Multiple Choice

Starting from long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, a five-period positive demand shock causes output to _____ until returning to the natural level in the long run.


A) remain continuously above the natural level of output
B) move above and then below the natural level of output
C) remain continuously below the natural level of output
D) move below and then above the natural level of output

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