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Suppose the economy is in its long run equilibrium. If there is an increase in investment, what happens in the

short run?

Price level rises and output rises

Price level falls and output rises

Price level rises and output falls

Price level falls and output falls

Not enough information

From the previous question, what happens in the long run (relative to the initial equilibrium)?

Price level falls and output is unchanged

Price level rises and output is unchanged

Price level rises and output falls

Price level falls and output falls

Not enough information

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