The figure shows the determination of thr equilibrium price level and real GDP in an aggregate demand-aggregate supply model.Which of the following economic changes is depicted by a movement from point e to point e'?
Figure 10.6

A)An increase in short-run aggregate supply
B)An increase in long-run aggregate supply
C)A decrease in short-run aggregate supply
D)A decrease in long-run aggregate supply
E)An increase in the aggregate quantity demanded

Question

The figure shows the determination of thr equilibrium price level and real GDP in an aggregate demand-aggregate supply model.Which of the following economic changes is depicted by a movement from point e to point e'?​ ​
Figure 10.6

A)An increase in short-run aggregate supply 
B)An increase in long-run aggregate supply​ 
C)A decrease in short-run aggregate supply​ 
D)A decrease in long-run aggregate supply​ 
E)An increase in the aggregate quantity demanded​

Quizplus · Accepted Answer

A movement from point e to point e' represents a decrease in short-run aggregate supply. This is because the equilibrium price level has increased while the equilibrium output level has decreased, which is consistent with a decrease in short-run aggregate supply.

The Figure Shows the Determination of Thr Equilibrium Price Level