Beginning from a Position of Long-Run Equilibrium at the Full-Employment

question 5

Multiple Choice

Beginning from a position of long-run equilibrium at the full-employment level of real GDP, the economy's short-run response to an increase in the aggregate demand curve would be:

• A) a movement upward along the short-run aggregate supply curve.
• B) a movement upward along the long-run aggregate supply curve.
• C) a downward shift in the short-run aggregate supply curve.
• D) a shift in both the aggregate demand curve and the short-run aggregate supply curve with a movement along the long-run aggregate supply curve.
• E) no change, since the economy is already in equilibrium.