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

question 139

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:

Plate Boundaries

The edges where two tectonic plates meet, characterized by seismic and volcanic activity due to plate interactions such as divergence, convergence, or transformation.

Volcano

a geological formation that occurs when magma from within the Earth's mantle or crust escapes to the surface, often resulting in eruptions.

Plate Boundaries

The edges where two tectonic plates meet, often associated with earthquakes and volcanic activity.

Volcano

A geological formation, typically a mountain, where magma (lava), volcanic ash, and gases are expelled through the earth's crust.