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Real GDP and Price Level
Suppose that the position of a nation's long-run aggregate supply curve has not changed, but its long-run equilibrium price level has increased. Which of the following factors might account for this event?
a. A rise in the value of the domestic currency relative to other world currencies.b. An increase in the quantity of money in circulation.c. An increase in the labor force participation rated. A decrease in taxese. A rise in real incomes of countries that are key trading partners of this nation.f. Increased long-run economic growth.
Developing nations are often concerned that their terms of trade might deteriorate as economic growth occurs.
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