Question
Consider the AD/AS model. Suppose there is an increase in the price of oil and simultaneously the government passes a new bill of 1.9 million
Consider the AD/AS model. Suppose there is an increase in the price of oil and simultaneously the government passes a new bill of 1.9 million dollars to improve the infrastructure in the top major cities. What should happen to the equilibrium price level and the equilibrium GDP?
a.
The equilibrium price level will change ambiguously while the change in equilibrium GDP will decrease.
b.
The equilibrium price level will decrease while the change in equilibrium GDP will change ambiguously.
c.
The equilibrium price level will increase while the change in equilibrium GDP will change ambiguously.
d.
The equilibrium overall price level and the equilibrium GDP will not change.
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