Scenario-Optimism Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people and businesses become more optimistic and have more confidence about the future ( an "increase in animal spirits"). Use the Keynesian model of aggregate demand and supply to answer the following questions(s). Refer to Optimism. How is the new long-run equilibrium different from the original one?
a. the inflation rate is higher and real GDP is the same. b. both inflation and real GDP are lower.
c. the inflation rate is the same and GDP is higher. d. both inflation and real GDP are higher
e. both inflation and GDP are the same