Suppose Canada's economy is in a long-run equilibrium with real GDP equal to potential output.Now suppose there is an increase in the Canadian-dollar price of all imported raw materials. In theshort run,In the long run,A.real GDP and the price level both fall; real GDP is below its original level with a lower price levelB.real GDP falls and the price level rises; real GDP and the price level return to their original levelsC.real GDP and the price level both rise; real GDP is above its original level with a higher price levelD.real GDP rises and the price level falls; real GDP returns to its original level with a lower price levelE.real GDP and the price level both rise; real GDP returns to its original level with a higher price level

The correct solution is option b.

Answered: Suppose Canada's economy is in a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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