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The AD-AS Model Predicts That a Positive AD Shock Will

Question 109

Multiple Choice

The AD-AS model predicts that a positive AD shock will cause the price level to ___________,from the initial to a new long-run equilibrium level.But the model is silent about how fast the price level will ___________ from the initial to the new level;the model cannot explain ___________.


A) increase;increase;the inflation rate
B) increase;increase;the price level
C) decrease;decrease;the inflation rate
D) increase;increase;stagflation
E) decrease;decrease;the price level

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