Beginning from a point of short-run equilibrium at point E₂ in Exhibit 6, the economy's movement to a new position of long-run equilibrium from that point would best be described as: A)a movement along the AD₂ curve caused by a shift in the SRAS₁ curve to SRAS₂. B)a movement along the SRAS₂ curve with a shift in the AD₂ curve. C)a shift in the LRAS curve to an intersection at E₃. D)no shift of any kind.

Question

Quizplus · Accepted Answer

In the long run, the economy adjusts to a new equilibrium by shifting the short-run aggregate supply (SRAS) curve to restore full employment, moving along the aggregate demand (AD) curve.

Beginning from a Point of Short-Run Equilibrium at Point E2

Beginning from a Point of Short-Run Equilibrium at Point E₂