Answer:
increases the price level and real output, and then reduces short-run aggregate supply such that the economy returns to the full-employment level of output.
Explanation:
In the case of New classical economists, if there is an increase in aggregate demand i.e. non expected would rise the level of price and real output. After this decrease the aggregate supply i.e. short run in order to get the economy return to the full employement output level
Therefore as per the given situation, the first option is correct
And, the rest of the options would be incorrect
