-In the above figure, if A is the initial equilibrium point and there is an unanticipated rise in aggregate demand from AD1 to AD2, then
A) the new short-run equilibrium will be at point B.
B) the new long-run equilibrium will be at point B.
C) the new short-run equilibrium will be at point D.
D) real Gross Domestic Product (GD
P) per year will fall below Y1.

Question

-In the above figure, if A is the initial equilibrium point and there is an unanticipated rise in aggregate demand from AD1 to AD2, then
A) the new short-run equilibrium will be at point B. 
B) the new long-run equilibrium will be at point B. 
C) the new short-run equilibrium will be at point D. 
D) real Gross Domestic Product (GD
P) per year will fall below Y1.

Quizplus · Accepted Answer

The new short-run equilibrium will be at point B because an unanticipated rise in aggregate demand from AD1 to AD2 shifts the equilibrium to the right along the short-run aggregate supply curve, leading to a higher price level and higher output in the short run.

-In the Above Figure, If a Is the Initial Equilibrium