Use the figure below to answer the following questions.
Figure 10.3.2
-Refer to Figure 10.3.2.As the economy automatically adjusts to long- run equilibrium, the
A)SAS curve shifts rightward.
B)AD curve shifts leftward.
C)SAS curve shifts leftward.
D)LAS curve shifts rightward.
E)AD curve shifts rightward.

Question

Use the figure below to answer the following questions.
  Figure 10.3.2
-Refer to Figure 10.3.2.As the economy automatically adjusts to long- run equilibrium, the
A)SAS curve shifts rightward. 
B)AD curve shifts leftward. 
C)SAS curve shifts leftward. 
D)LAS curve shifts rightward. 
E)AD curve shifts rightward.

Quizplus · Accepted Answer

In the long-run, the economy adjusts to equilibrium by shifting the Short-Run Aggregate Supply (SAS) curve leftward if there is an inflationary gap, as wages and resource prices increase, reducing supply.

Use the Figure Below to Answer the Following Questions