Figure 33-3
-Refer to Figure 33-3. Starting from point A and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a
A)falling price level and a falling level of output, as the economy moves to point C.
B)rising price level and a falling level of output, as the economy moves to point B.
C)falling price level and a rising level of output, as the economy moves to point B.
D)rising price level and a rising level of output, as the economy moves to point C.

Question

Figure 33-3 
-Refer to Figure 33-3. Starting from point A and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a
A)falling price level and a falling level of output, as the economy moves to point C. 
B)rising price level and a falling level of output, as the economy moves to point B. 
C)falling price level and a rising level of output, as the economy moves to point B. 
D)rising price level and a rising level of output, as the economy moves to point C.

Quizplus · Accepted Answer

In the long run, the economy will move towards its natural level of output. If aggregate demand is constant, the price level will adjust to bring output back to its natural level, resulting in a falling price level and a rising level of output as the economy moves to point B.

Figure 33-3 -Refer to Figure 33-3. Starting from Point a and Assuming