Biology Forums - Study Force

Suppose the economy is in equilibrium at an output less than potential GDP. According to the self-correcting model,
A) aggregate demand will immediately expand and return the economy to potential GDP.
B) wages and input prices will eventually fall, which will shift the short-run aggregate supply curve to the right and restore potential GDP.
C) policymakers will eventually increase aggregate demand, which will restore potential GDP.
D) wages and input prices will eventually fall, which will shift the short-run aggregate supply curve to the left and restore potential GDP.
E) wages and input prices will eventually rise which will push the aggregate demand curve to the right and return the economy to potential GDP.

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