The Figure Below Shows Short-Run Equilibrium in an Aggregate Demand-Aggregate

question 87

Multiple Choice

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is currently producing Y1 level of output,long-run equilibrium will be established if:

• A)the short-run aggregate supply curve shifts to the right to remove the expansionary gap.
• B)the short-run aggregate supply curve shifts to the left to remove the expansionary gap.
• C)the short-run aggregate supply curve shifts to the left to remove the recessionary gap.
• D)the short-run aggregate supply curve shifts to the right to remove the recessionary gap.
• E)there is a leftward shift of the aggregate demand curve.

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Definitions:

Californios

Descendants of Spanish and Mexican settlers in the California region, especially before and right after it became part of the United States.

Fort Sumter

First battle of the Civil War, in which the federal fort in Charleston (South Carolina) Harbor was captured by the Confederates on April 14, 1861, after two days of shelling.

Confederate Forces

Military units, soldiers, and personnel that fought for the Confederacy during the American Civil War, primarily representing the southern states that seceded from the Union.

Confederate States

Refers to the 11 southern states that seceded from the United States from 1860—1861, forming the Confederacy during the American Civil War, primarily over the issue of slavery.