Exhibit 5.3

-Refer to Exhibit 5.3 which shows the aggregate demand and supply curves for the United States. The price level changes from _____ when the aggregate supply curve shifts from AS' to AS".
A) 4 to 2
B) 2 to 3
C) 2 to 2
D) 3 to 1
E) 2 to 4

Question

Exhibit 5.3
 
-Refer to Exhibit 5.3 which shows the aggregate demand and supply curves for the United States. The price level changes from _____ when the aggregate supply curve shifts from AS' to AS".
A) 4 to 2 
B) 2 to 3 
C) 2 to 2 
D) 3 to 1 
E) 2 to 4

Quizplus · Accepted Answer

When the aggregate supply curve shifts from AS' to AS", it indicates a decrease in aggregate supply, leading to a higher equilibrium price level. Thus, the price level changes from 2 to 4, as a shift leftward in the supply curve typically results in higher prices due to the reduced quantity of goods available at any given price level.

Exhibit 5.3 -Refer to Exhibit 5.3 Which Shows the Aggregate Demand and the Aggregate