long-run equilibrium

long-run equilibrium

1. Suppose that there is a sudden rise in the price level. What will happen to economywide planned spending on purchases of goods and services? Why?
2. Assume that the economy is in long-run equilibrium with complete information and that input prices adjust rapidly to changes in the prices of goods and services. If there is a rise in the price level induced by an increase in aggregate demand, what happens to real GDP?

long-run equilibrium

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