Based on Exhibit 1, when the aggregate demand curve shifts to the position AD₂and the economy is operating at point E₂, the economy's position of long-run equilibrium corresponds to point: A)E₁. B)E₂. C)E₃. D)E₁ or E₃.

Question

Quizplus · Accepted Answer

In the long-run equilibrium, the economy operates at full employment, which corresponds to the intersection of the long-run aggregate supply curve and the aggregate demand curve at point E₃.

Based on Exhibit 1, When the Aggregate Demand Curve Shifts