If the aggregate demand curve shifts rightward following a decrease in the cash rate, what can be concluded if the short- run aggregate supply curve is rather steep?
A) There is significant unemployment and slack in the economy.
B) There will be a significant increase in real GDP with little impact on the price level.
C) There will be a significant increase in both real GDP and the price level.
D) There will be little increase in real GDP but a significant increase in the price level.
Correct Answer:
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