Figure 33-2
-Refer to Figure 33-2. If the economy starts at S and moves to V in the short run, the economy
A)moves to S in the long run.
B)moves to T in the long run.
C)moves to U in the long run.
D)stays at V in the long run.

Question

Figure 33-2  ​
-Refer to Figure 33-2. If the economy starts at S and moves to V in the short run, the economy
A)moves to S in the long run. 
B)moves to T in the long run. 
C)moves to U in the long run. 
D)stays at V in the long run.

Quizplus · Accepted Answer

In the long run, the economy tends to return to its natural level of output, which is represented by point U. This is due to adjustments in prices and wages that bring the economy back to its potential output.

Figure 33-2 ​

Figure 33-2