Real business cycle theory-longrun aggregate demand

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Reference no: EM13986391

In the real business cycle theory, if longrun aggregate supply increases, then longrun aggregate demand increases by

1) an equal amount, so that real output increases and the price level remains unchanged.

2) less than the amount of increase in aggregate supply, so that real output increases and the price level decreases.

3) more than the amount of increase in aggregate supply, so that real output increases and the price level increases.

4) an equal amount, so that both real output and the price level increase

Reference no: EM13986391

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