In the macroeconomy, demand-side shifts change:
A) only the price level in the long run, while output eventually returns to its long-run potential level.
B) only the output level in the long run, while prices eventually return to their long-run potential levels.
C) aggregate demand only, which eventually shifts back in the long run.
D) aggregate demand only, which is why the price level remains unaffected in the long run.

Question

Quizplus · Accepted Answer

In the long run, demand-side shifts affect only the price level, as output returns to its potential level due to the economy's self-correcting mechanism.

In the Macroeconomy, Demand-Side Shifts Change