Refer to the information provided in Figure 28.6 below to answer the question(s) that follow. Figure 28.6
-Refer to Figure 28.6. Assuming all shocks to the economy arise from demand changes, which panel represents the short-run relationship between output and the price level?

Question

Refer to the information provided in Figure 28.6 below to answer the question(s) that follow.  Figure 28.6
-Refer to Figure 28.6. Assuming all shocks to the economy arise from demand changes, which panel represents the short-run relationship between output and the price level?

Quizplus · Accepted Answer

Panel B represents the short-run relationship between output and the price level because it shows a downward sloping aggregate demand curve intersecting with an upward sloping short-run aggregate supply curve. This intersection point determines the equilibrium price level and output level in the short-run.

Refer to the Information Provided in Figure 28