Use the Following to Answer Questions

question 113

Multiple Choice

Use the following to answer questions :
Exhibit: Shift in Aggregate Demand
-(Exhibit: Shift in Aggregate Demand) In this graph, initially the economy is at point E, with price P₀ and output Y. Aggregate demand is given by curve AD₀, and SRAS and LRAS represent, respectively, short-run and long-run aggregate supply. Now assume that the aggregate demand curve shifts so that it is represented by AD₁. The economy moves first to point ______ and then, in the long run, to point ______.

• A) A; D
• B) D; A
• C) C; B
• D) B; C

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