Answer to Question #63544 in Macroeconomics for Tom
Assume perfect capital mobility, fixed nominal exchange rate and adaptive expectations. How does a one-time increase in productivity affect the economy?
Select one or more:
a. It moves both the LAS ans AS curves to the right but the AS curve changes its position over time.
b. It lowers the domestic price level permanently.
c. It moves the LAS curve to the right but the AS curve does not change.
d. It lowers the domestic price level but only temporarily.