Refer to the information provided in Figure 32.3 below to answer the question(s) that follow. Figure 32.3
-Refer to Figure 32.3. Suppose the economy is at Point A. According to the new classical theory, an anticipated increase in aggregate demand
A) leaves the economy at Point A.
B) moves the economy to Point B.
C) moves the economy to Point C.
D) moves the economy to Point D.

Question

Refer to the information provided in Figure 32.3 below to answer the question(s) that follow.  Figure 32.3
-Refer to Figure 32.3. Suppose the economy is at Point A. According to the new classical theory, an anticipated increase in aggregate demand
A) leaves the economy at Point A. 
B) moves the economy to Point B. 
C) moves the economy to Point C. 
D) moves the economy to Point D.

Quizplus · Accepted Answer

According to the new classical theory, an anticipated increase in aggregate demand leads to a movement along the long-run aggregate supply curve, resulting in higher prices but no change in output, moving the economy to Point C.

Refer to the Information Provided in Figure 32