# Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the short run ? with Answer - Economics Mcqs | TestPrep

> Solved MCQ: Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the short run ? Correct Answer: D. Price rise; output rise. Verified answer explanation for FPSC, PPSC, MDCAT, NTS, and CSS competitive exam preparation.

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# Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the short run ?

Direct Answer & Quick Reference

The correct option is **D. Price rise; output rise**.

A. Price fall; output rises

B. Price fall; output falls

C. Price rise; output fall

D. Price rise; output rise **(Correct Answer)**

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Verified Key: D. Price rise; output rise
Solved by 2,442+ students

Verified against official examination board answer keys and standard curriculum textbooks.

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