Exhibit: Shift in Aggregate Demand in This Graph, Initially

question 26

Multiple Choice

Exhibit: Shift in Aggregate Demand In this graph, initially the economy is at point E, with price P₀ and output Ȳ aggregate demand is given by curve AD₀, and SRAS and LRAS represent, respectively, short-run and long-run aggregate supply. Now assume that the aggregate demand curve shifts so that it is represented by AD₁. The economy moves first to point _____ and then, in the long run, to point _____.

• A)A; D
• B)D; A
• C)C; B
• D)B; C

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