Question

Any change in Aggregate Demand will have what effect in the Long-Run Classical Macroeconomic Equilibrium Model?

A. Only change the Real Output
B. Only change the Aggregate Price Level
C. Change both the Aggregate Price Level and the Real Output

Answer 1

Answer: Only change the Aggregate Price Level

Step-by-step explanation: In the Classical model, the Long-run level of output remains unchanged at the full employment level. So, any change in the Aggregate demand or Aggregate supply without any change in the long-run supply will only lead to a change in the aggregate price level in the economy.