-The figure above shows the aggregate demand, short- run aggregate supply, and long- run aggregate supply curves for the economy of Tomorrowland. The economy is currently at point A. A demand- pull rise in the price level will initially move the economy to point _ and to point
)
A) C when the wage rate rises; D when aggregate demand increases
B) E; A when aggregate demand changes
C) E when aggregate demand increases; D when the wage rate rises
D) B when aggregate demand decreases; C when the wage rate rises

Question

-The figure above shows the aggregate demand, short- run aggregate supply, and long- run aggregate supply curves for the economy of Tomorrowland. The economy is currently at point A. A demand- pull rise in the price level will initially move the economy to point _ and to point
)
A) C when the wage rate rises; D when aggregate demand increases 
B) E; A when aggregate demand changes 
C) E when aggregate demand increases; D when the wage rate rises 
D) B when aggregate demand decreases; C when the wage rate rises

Quizplus · Accepted Answer

A demand-pull rise in the price level initially moves the economy to point E when aggregate demand increases. Eventually, it moves to point D when the wage rate rises, as the economy adjusts to the new price level.

-The Figure Above Shows the Aggregate Demand, Short- Run Aggregate