The economy is at point A in the accompanying
diagram.

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Question: The economy is at point A in the accompanying diagram. Suppose that the aggregate price level …
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Question: The economy is at point A in the accompanyingdiagram.Suppose that the <a href=aggregate price level …” />

Suppose that the aggregate price level rises from
P1 to P2. How will aggregate supply adjust in the short run and in
the long run to the increase in the aggregate price level? Choose
the best response below.

In the short run, as the aggregate price level rises, nominal
wages will not change so real GDP will increase.
In the short run, as the aggregate price level rises, nominal
wages will not change so real GDP will decrease.
In the long run, as the aggregate price level rises, nominal
wages will not change so real GDP will increase.

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