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…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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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