Refer to the following figure when answering
Figure 14.3: AS/AD Model
-Consider Figure 14.3 above. If the economy begins in its long-run equilibrium and there is a decrease in the economy's financial friction, the economy would move from point ________ to ________.
A) c; d
B) a; d
C) b; c
D) a; b
E) b; a

Question

Refer to the following figure when answering  
Figure 14.3: AS/AD Model 
-Consider Figure 14.3 above. If the economy begins in its long-run equilibrium and there is a decrease in the economy's financial friction, the economy would move from point ________ to ________.
A) c; d 
B) a; d 
C) b; c 
D) a; b 
E) b; a

Quizplus · Accepted Answer

A decrease in financial friction typically leads to an increase in investment and aggregate demand, moving the economy from a lower output point (a) to a higher output point (b) in the short run.

Refer to the Following Figure When Answering