In the classical IS-LM/AD-AS model,a beneficial productivity shock would ________ output,________ the real interest rate,and ________ the price level.
A)increase; decrease; increase
B)increase; decrease; decrease
C)increase; increase; decrease
D)decrease; decrease; increase

Question

Quizplus · Accepted Answer

A beneficial productivity shock in the classical IS-LM/AD-AS model would increase output due to higher efficiency and productivity. This would lead to a decrease in the real interest rate as the demand for money decreases (with stable or increased supply), and it would also decrease the price level due to increased supply of goods and services, making them cheaper.

In the Classical IS-LM/AD-AS Model,a Beneficial Productivity Shock Would ________