Suppose the government passes legislation that encourages investment in research and the development of new technologies. Assume this policy results in positive technological change for the economy and "takes hold" at a time when the economy has been restored to a position of long-run equilibrium as depicted by point 1 in the figure to the right. Compared to its original state, the economy in the new short-run equilibrium has output that is is However, a negative output gap now exists since curve (AS₂) will shift The shifts in the short-run aggregate supply curve continue until: O A. the output gap falls to zero. OB. the AS curve intersects AD, and LRAS2. OC. a new long-run equilibrium is attained. OD. Both A and C are correct. OE. All of the above are correct. and inflation that ✓, so consequently the new short-run aggregate supply ..... Inflation Rate (percent) LRAS₁ * YP AS₁ AD₁ Aggregate Output, Y ($ billions) Q G

Suppose the government passes legislation that encourages investment in research and the development of new technologies. Assume this policy results in positive technological change for the economy and "takes hold" at a time when the economy has been restored to a position of long-run equilibrium as depicted by point 1 in the figure to the right. Compared to its original state, the economy in the new short-run equilibrium has output that is is However, a negative output gap now exists since curve (AS₂) will shift The shifts in the short-run aggregate supply curve continue until: O A. the output gap falls to zero. OB. the AS curve intersects AD, and LRAS2. OC. a new long-run equilibrium is attained. OD. Both A and C are correct. OE. All of the above are correct. and inflation that ✓, so consequently the new short-run aggregate supply ..... Inflation Rate (percent) LRAS₁ * YP AS₁ AD₁ Aggregate Output, Y ($ billions) Q G

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.2P

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