Figure 15-4
-In Figure 15-4,if initial equilibrium is at point C and there is an anticipated decrease in aggregate demand from A D₂ to A D₁ due to an anticipated decrease in the money supply,then
A)the economy will move directly from point C to point A without passing through point D.
B)the economy will move directly from point C to point D,and will remain at point D in the long run.
C)the price level will shift to P₂ in the short run.
D)the price level will shift to P₂ in the long run.

Question

Figure 15-4 
-In Figure 15-4,if initial equilibrium is at point C and there is an anticipated decrease in aggregate demand from A D₂ to A D₁ due to an anticipated decrease in the money supply,then
A)the economy will move directly from point C to point A without passing through point D. 
B)the economy will move directly from point C to point D,and will remain at point D in the long run. 
C)the price level will shift to P₂ in the short run. 
D)the price level will shift to P₂ in the long run.

Quizplus · Accepted Answer

In the short run, an anticipated decrease in aggregate demand due to a decrease in the money supply will cause the economy to move directly from the initial equilibrium point C to point A, as prices and output adjust quickly to the new demand level.

Figure 15-4 -In Figure 15-4,if Initial Equilibrium Is at Point C and Point