An increase in spending has what impact in the short run and long run?
A) Only prices are impacted in the short run, and only output is affected in the long run.
B) Only output is impacted in the short run, and only prices are affected in the long run.
C) Both prices and output are impacted in the short run, and only prices are affected in the long run.
D) Both prices and output are impacted in the short run, and only output is affected in the long run.

Question

Quizplus · Accepted Answer

In the short run, an increase in spending can lead to higher output and prices due to increased demand. In the long run, output returns to its natural level, and only prices are affected as the economy adjusts.

An Increase in Spending Has What Impact in the Short