The Figure Below Shows the Short-Run Aggregate Demand and Supply

question 82

Multiple Choice

The figure below shows the short-run aggregate demand and supply curves of an economy. If the economy is currently producing at Y₂, long-run equilibrium will most likely be established by a(n) :

• A) increase in short-run aggregate supply.
• B) decrease in short-run aggregate supply.
• C) decrease in potential output.
• D) increase in potential output.
• E) rightward shift of the aggregate demand curve.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, used in statistics to quantify the spread of a data set.

Budget Line

A graphical representation of all possible combinations of two goods that an individual can purchase, given their income and the prices of the goods.

Expected Rate

A forecasted value, often referring to interest or growth rates, based on current and historical data.

Expected Rate

In finance, it typically refers to the predicted average rate of return on an investment over a specified period.