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sgy_89 sgy_89
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7 years ago
Suppose that an increase in aggregate demand propels the economy to an equilibrium output in excess of potential GDP. According to the self-correcting model,
A) the aggregate demand curve will eventually shift back to the left (downward) and return the economy to potential GDP.
B) the short-run aggregate supply curve will eventually shift to the right (downward) and return the economy to potential GDP.
C) the short-run aggregate supply curve will eventually shift to the left (upward) and return the economy to potential GDP.
D) the higher price level will increase labor productivity, which will shift the short-run aggregate supply curve to the right and increase potential GDP.
E) potential GDP will immediately expand to match the increase in aggregate demand.
Textbook 
Introduction to Economic Reasoning

Introduction to Economic Reasoning


Edition: 8th
Author:
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hecosmetichecosmetic
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sgy_89 Author
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7 years ago
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