Consider the exhibit below for the following questions.
Figure 14-1
-Refer to Figure 14-1. If the economy starts at A and moves to D, what happens to the economy in the long run?
A)It moves to A.
B)It moves to B.
C)It moves to C.
D)It moves back to D.

Question

Consider the exhibit below for the following questions.
Figure 14-1 
-Refer to Figure 14-1. If the economy starts at A and moves to D, what happens to the economy in the long run?
A)It moves to A. 
B)It moves to B. 
C)It moves to C. 
D)It moves back to D.

Quizplus · Accepted Answer

The economy moves to point C in the long run because at this point, the economy has reached its potential output level while maintaining full employment. This point represents the long-run equilibrium.

Consider the Exhibit Below for the Following Questions