Answer Happy

An economy is currently in a long run equilibrium where SRAS = LRAS = AD. Suppose that real rate of interest decreases, which of the following is the best explanation of the outcome? O A. Long-run aggregate supply increases. O B. Short-run aggregate supply increases. O C. Aggregate demand, short-run and long-run aggregate supply all increase. O D. Aggregate demand increases. Given that the economy is currently in a long run equilibrium where SRAS = LRAS = AD real rate of interest decreases the economy would then experience O A. a recessionary gap. B. stagflation. O C. a depressionary gap. O D. an inflationary gap.