Assuming that the economy is currently in a long- run equilibrium at Y*, a negative aggregate demand shock with no change in the money supply will eventually result in
A) an ongoing inflation in the economy.
B) a lower price level and GDP below potential output.
C) no change in the price level.
D) a higher price level and GDP at potential GDP.
E) a lower price level and GDP at its potential level.
Correct Answer:
Verified
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