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Old 04-23-2008, 10:55 AM
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Please help: Economics mult choice?

The economy is in Long-run equilibrium when the gov't decides to sigificantly increase spending on transportation infrastructure, which will lower the shipping costs for many businesses. We expect in the Short-run:

a) real GDP to increase, price level to fall, Long Run: no effect
b) real GDP to increase, price level to fall, Long Run: real GDP to increase, price level is ambiguous
c) real GDP to increase, price level is ambiguous, Long Run: real GDP to increase, price level is ambiguous
d) real GDP to increase, price level is ambiguous, Long Run: price level to increase, real GDP is ambiguous

I don't think it's D because the answer was messed up in typing on the paper..., but other than that, i have no idea how to do this
can you tell me the answer and *how* you got it? thanks!!
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