Starting from long-run equilibrium,an increase in autonomous consumption results in ________ actual output in the short run and _________ output in the long run.
A) higher;higher
B) higher;no change in potential
C) lower;no change in potential
D) lower;higher
E) lower;lower

Question

Quizplus · Accepted Answer

In the short run, an increase in autonomous consumption raises actual output due to increased aggregate demand. In the long run, the economy returns to its potential output level, as prices and wages adjust, leaving no change in potential output.

Starting from Long-Run Equilibrium,an Increase in Autonomous Consumption Results in ________