Price Level Long-run AS Y, Y, Short-run AS AD Quantity of Real Output Suppose the economy is operating in a recession such as point B in the graph. If policymakers allow the economy to adjust to the long-run natural level on its own, O a people will raise their price expectations and the short-run aggregate supply will shift left O b. people will reduce their price expectations and aggregate demand will shift right O c people will raise their price expectations and aggregate demand will shift left O d. people will reduce their price expectations and the short-run aggregate supply will shift right
Price Level Long-run AS Y, Y, Short-run AS AD Quantity of Real Output Suppose the economy is operating in a recession such as point B in the graph. If policymakers allow the economy to adjust to the long-run natural level on its own, O a people will raise their price expectations and the short-run aggregate supply will shift left O b. people will reduce their price expectations and aggregate demand will shift right O c people will raise their price expectations and aggregate demand will shift left O d. people will reduce their price expectations and the short-run aggregate supply will shift right
Chapter8: Macroeconomic Equilibrium: Aggregate Demand And Supply
Section: Chapter Questions
Problem 20E
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