Consider the exhibit below for the following questions.
Figure 23-1
-Refer to Figure 23-1.If the economy starts at A and moves to D in the short run,the economy
A) moves to A in the long run.
B) moves to B in the long run.
C) moves to C in the long run.
D) stays at D in the long run.

Question

Consider the exhibit below for the following questions.
Figure 23-1 
-Refer to Figure 23-1.If the economy starts at A and moves to D in the short run,the economy
A) moves to A in the long run. 
B) moves to B in the long run. 
C) moves to C in the long run. 
D) stays at D in the long run.

Quizplus · Accepted Answer

In the long run, the economy will move from point D to point C as the aggregate supply increases due to factors such as increased capital or technology. This will result in a lower price level and a higher level of output (closer to potential output).

Consider the Exhibit Below for the Following Questions