Assume that the macro-economy is initially in short -run equilibrium. What happens to the equilibrium price level and equilibrium level of real GDP if interest rates in the economy fall? Question 4 options: a) Both the equilibrium price level and the equilibrium level of real GDP decrease. b) The equilibrium price level increases and the equilibrium level of real GDP decreases. c) Both the equilibrium price level and the equilibrium level of real GDP increase. d) The equilbrium price level falls and the equilibrium level of real GDP increases.

The short-run macroeconomy equilibrium is determined by the AD-AS model. The intersection of…

Answered: Assume that the macro-economy is…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 61P: Table 24.4 describes Santhers economy. Plot the AD/AS curves and identify the equilibrium. Would you...

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Assume that the macro-economy is initially in short -run equilibrium. What happens to the equilibrium price level and equilibrium level of real GDP if interest rates in the economy fall?

Question 4 options:

a)	Both the equilibrium price level and the equilibrium level of real GDP decrease.

b)	The equilibrium price level increases and the equilibrium level of real GDP decreases.

c)	Both the equilibrium price level and the equilibrium level of real GDP increase.

d)	The equilbrium price level falls and the equilibrium level of real GDP increases.

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