Use the table below to answer the following questions.
Table 26.3.1

-Refer to Table 26.3.1. As this economy moves to long-run equilibrium, the
A)SAS curve shifts leftward.
B)SAS curve shifts rightward.
C)AD curve shifts rightward.
D)AD curve shifts leftward.
E)LAS curve shifts leftward.

Question

Use the table below to answer the following questions.
Table 26.3.1
 
-Refer to Table 26.3.1. As this economy moves to long-run equilibrium, the
A)SAS curve shifts leftward. 
B)SAS curve shifts rightward. 
C)AD curve shifts rightward. 
D)AD curve shifts leftward. 
E)LAS curve shifts leftward.

Quizplus · Accepted Answer

As the economy moves to long-run equilibrium, the SAS curve shifts rightward to intersect with the LAS curve at the potential output level. This is because in the long run, wages and prices are flexible and adjust to changes in aggregate demand, allowing output to return to potential. The AD curve remains unchanged as it determines the equilibrium price level, while the LAS curve represents potential output, which is determined by the economy's factors of production and technology.

Use the Table Below to Answer the Following Questions