-In the above figure, if aggregate demand does not change the short- run equilibrium will
A) eventually adjust to a long- run equilibrium with a lower price level.
B) eventually adjust to a long- run equilibrium with a higher price level.
C) will not adjust on its own.
D) None of the above answers are correct.

Question

-In the above figure, if aggregate demand does not change the short- run equilibrium will
A) eventually adjust to a long- run equilibrium with a lower price level. 
B) eventually adjust to a long- run equilibrium with a higher price level. 
C) will not adjust on its own. 
D) None of the above answers are correct.

Quizplus · Accepted Answer

In the long run, if aggregate demand does not change, the economy will adjust to a long-run equilibrium at the natural level of output, which typically involves a lower price level if the initial short-run equilibrium was above the natural level of output.

-In the Above Figure, If Aggregate Demand Does Not Change