According to the AD and SRAS model, if the economy is at the Solow growth rate, then a temporary increase in the growth rate of investment spending will cause I. no increase in real growth rates in the long run. II. no increase in the inflation rate in the long run. III. an increase in both the inflation and real growth rates in the short run. IV. an increase in real growth rates in the long run.
A) I and II only
B) III and IV only
C) I and III only
D) I, II, and III only
Correct Answer:
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