Exhibit 16-2

-Refer to Exhibit 16-2.Suppose the economy starts at point A.The AD curve shifts from AD₁ to AD₂and the public perfectly anticipates this.Under new Keynesian macroeconomic assumptions,the most likely short-run equilibrium point will be

Question

Exhibit 16-2

-Refer to Exhibit 16-2.Suppose the economy starts at point A.The AD curve shifts from AD₁ to AD₂and the public perfectly anticipates this.Under new Keynesian macroeconomic assumptions,the most likely short-run equilibrium point will be

Quizplus · Accepted Answer

Under new Keynesian macroeconomic assumptions, the short-run aggregate supply curve is upward sloping. As a result, the economy will move along the AD curve to a point where the AD curve intersects the SRAS curve. In this case, the economy will move to point C, which is on the line between point D and point B.

Exhibit 16-2 -Refer to Exhibit 16-2.Suppose the Economy Starts at Point A.The