Suppose that the government implements expansionary fiscal policy that raises aggregate demand, but the policy is unanticipated. According to new classical theory, in the short run the price level would ____________ and Real GDP would ______________. In the long run, new classical theory would predict that the price level would ______________ compared to its original long-run equilibrium level

and that Real GDP would ____________.
A) rise; decline; rise; remain unchanged
B) rise; rise; rise; remain unchanged
C) rise; decline; remain unchanged; rise
D) fall; rise; remain unchanged; rise

B

Economics

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