Figure 9.2
-Refer to Figure 9.2. Suppose the economy is at Point A, a decrease in the price level causes a movement to Point:
A) E.
B) B.
C) D.
D) C.

Question

Figure 9.2
-Refer to Figure 9.2. Suppose the economy is at Point A, a decrease in the price level causes a movement to Point:
A) E. 
B) B. 
C) D. 
D) C.

Quizplus · Accepted Answer

A decrease in the price level causes a movement along the aggregate demand curve to the right. Therefore, the new equilibrium point will be on the same aggregate supply curve but at a higher level of output. Only Point C satisfies these conditions.

Figure 9.2 -Refer to Figure 9.2. Suppose the Economy Is at Point