Consider the exhibit below for the following questions.
Figure 33-4
-Refer to Figure 33-4.If the economy starts at A and moves to D in the short run,the economy
A)moves to A in the long run.
B)moves to B in the long run.
C)moves to C in the long run.
D)stays at D in the long run.

Question

Consider the exhibit below for the following questions.
Figure 33-4 
-Refer to Figure 33-4.If the economy starts at A and moves to D in the short run,the economy
A)moves to A in the long run. 
B)moves to B in the long run. 
C)moves to C in the long run. 
D)stays at D in the long run.

Quizplus · Accepted Answer

According to the exhibit, point D is to the right of the long-run aggregate supply (LRAS) curve, indicating an output level that is unsustainable in the long run. As the economy adjusts to this level of output, factors such as increased wages and prices will shift the SRAS curve to the left. Eventually, the economy will settle at a new equilibrium point where the AD curve intersects the LRAS curve, which is point C. Therefore, the economy will move to C in the long run.

Consider the Exhibit Below for the Following Questions