Figure 10-18

-Beginning from a point of short-run equilibrium at point E₂ in Figure 10-18,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 with 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

Figure 10-18
 
-Beginning from a point of short-run equilibrium at point E₂ in Figure 10-18,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 with 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.

Quizplus · Accepted Answer

In the long run, the economy adjusts to a new equilibrium by moving along the aggregate demand curve (AD₂) while the short-run aggregate supply curve (SRAS₁) shifts to SRAS₂ to reflect changes in factors like resource availability or technology.

Figure 10-18 -Beginning from a Point of Short-Run Equilibrium at Point E₂