In the dynamic model of aggregate demand and aggregate supply, changes in the natural level of output change:
A) the DAD curve, but not the DAS curve.
B) the DAS curve, but not the DAD curve.
C) both the DAD curve and the DAS curve.
D) neither the DAD nor the DAS curve.

Question

Quizplus · Accepted Answer

Changes in the natural level of output affect the potential output of the economy, which is represented by the DAS curve. Therefore, changes in the natural level of output will shift the DAS curve.

In the Dynamic Model of Aggregate Demand and Aggregate Supply