Use the figure below to answer the following questions.

Figure 26.3.2
-Refer to Figure 26.3.2. As the economy of Mythlo automatically adjusts to long-run equilibrium, the
A)SAS curve shifts rightward.
B)AD curve shifts rightward.
C)SAS curve shifts leftward.
D)AD curve shifts leftward.
E)LAS curve shifts rightward.

Question

Use the figure below to answer the following questions.
  
Figure 26.3.2
-Refer to Figure 26.3.2. As the economy of Mythlo automatically adjusts to long-run equilibrium, the
A)SAS curve shifts rightward. 
B)AD curve shifts rightward. 
C)SAS curve shifts leftward. 
D)AD curve shifts leftward. 
E)LAS curve shifts rightward.

Quizplus · Accepted Answer

In the long-run, if the economy is above potential output, the SAS curve shifts leftward as wages and other input prices rise, reducing short-run aggregate supply.

Use the Figure Below to Answer the Following Questions