-In the Above Figure, If Initial Equilibrium Is at Point

question 188

Multiple Choice

-In the above figure, if initial equilibrium is at point A and if there is an unanticipated increase in aggregate demand from AD₁ to AD₂, then

• A) in the short run real output will remain at Y₁.
• B) in the short run real output will increase above Y₁, but in the long run it will return to Y₁.
• C) in the long run real output will increase above Y₁.
• D) real output will increase above Y₁ in both the short run and in the long run.