In the market for factors of production, firms earn income by selling goods and services to households

If aggregate demand shifts outward over a long period of time, with aggregate supply held constant, the economy should experience

a. unemployment. b. recession. c. budget surpluses. d. inflation.

Which set of changes is definitely predicted to raise Real GDP in the short run?

A) Wealth increases and there is an adverse supply shock. B) Individuals expect higher (future) incomes and wage rates fall. C) Business taxes rise and wage rates fall. D) The U.S. dollar appreciates and there is a beneficial supply shock. E) none of the above