Register
Assume the economy is self-regulating and currently is in long-run equilibrium with the price level equal to P5. If something happens that shifts the AD curve to the AD1position, the economy will eventually
228k views
0 votes
Assume the economy is self-regulating and currently is in long-run equilibrium with the price level equal to P5. If something happens that shifts the AD curve to the AD1position, the economy will eventually settle down at a long-run equilibrium point of __________.a. P5, Q3.b. P4, Q4.c. P3, Q3.d. P3, Q5.e. P4, Q2.

User Giacomo Lacava
by
3.8k points

1 Answer

3 votes

Answer:

c) P3, Q3.

Step-by-step explanation:

The new long run equilibrium point will be where the aggregate demand curve 1 (AD1) intersects long run aggregate supply curve (LRAS) at P3, Q3.

Since the LRAS curve is horizontal at Q3, all the equilibrium points must be located at Q3, so all you have to check is at what price the AD curve intersects Q3.

Assume the economy is self-regulating and currently is in long-run equilibrium with-example-1
User Cuong Vu
by
3.2k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

3.4m questions

4.3m answers

Other Questions

How can expansionary​ expenditure-based fiscal policy lead to crowding out in the​ economy? A. ​Expenditure-based fiscal policy increases the national​ debt, inducing​ forward-looking households and firms
Stevenson Company purchased equipment for $250,000 on January 1, 2010. The estimated salvage value is $50,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation.
In order to attract younger customers to the Lacoste brand of clothing, CEO Robert Siegel made all of the major decisions in product planning, distribution, and promotion. He asked for no input from his
The method of appraisal in which the appraiser estimates the replacement cost of the building, deducts depreciation, and adds the value of the site is:________
The Yum and Yee food truck near the business school serves customers during lunch hour by taking orders and making fresh batches of stir-fry. Customers have only one choice during the lunch hour so that
Link Copied!