How will

(a) an unexpected 3 percent fall in the price level in the goods and services market differ from

(b) 1 percent inflation when 4 percent inflation had been expected? What impact would

(a) and

(b) have on the real price of resources, profit margins, output, and employment? Explain.

*10. Suppose that an unexpectedly rapid growth in real income abroad leads to a sharp increase in the demand for U.S. exports. What impact will this change have on the price level, output, and employment in the short run in the United States? In the long run?