Refer to the Given Figure

question 115

Multiple Choice

Refer to the given figure. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as:

• A)aggregate demand shifting rightward.
• B)aggregate demand shifting leftward.
• C)short-run aggregate supply shifting downward.
• D)long-run aggregate supply shifting leftward.

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Definitions:

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The theoretical rate of return on an investment with zero risk, often represented by the yield on government securities.

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Bonds that grant the holder the right to force the issuer to buy back the bond at a predetermined price before maturity.

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A financial security (for example, a bond or a preferred stock) that can be converted into a different form, often common stock.