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Figure: A Real Shock
-(Figure: A Real Shock) Refer to the figure.After a real shock,the economy is operating at point Y in the figure.Assuming there is no crowding out,fiscal policy that shifts aggregate demand from AD₀ to AD₂ will move the economy to point:

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Figure: A Real Shock

-(Figure: A Real Shock) Refer to the figure.After a real shock,the economy is operating at point Y in the figure.Assuming there is no crowding out,fiscal policy that shifts aggregate demand from AD₀ to AD₂ will move the economy to point:

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If fiscal policy shifts aggregate demand from AD₀ to AD₂, the economy moves to point V, where the new aggregate demand curve intersects the long-run aggregate supply curve, indicating a new equilibrium.

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