Question

If AD decreases in the short run and the government decides to let the economy fix itself what would happen in the long run

Answer 1

Step-by-step explanation:

If AD changes, then output and unemployment will change in the short run, but not in the long run. As a result, output increases and unemployment decreases. Unfortunately, this positive AD shock also means that inflation increases: An increase in AD leads to an increase in real GDP and the price level.

Answer 2

Answer: AS would shift to the right

Step-by-step explanation: