If the economy is above long-run equilibrium output, what will happen in the long run if SRAS adjusts?
A) Prices rise and output increases.
B) Prices rise and output decreases.
C) Prices fall and output increases.
D) Prices fall and output decreases.

Question

Quizplus · Accepted Answer

In the long run, if the economy is above long-run equilibrium output, SRAS will adjust by shifting left, leading to higher prices and a decrease in output back to the long-run equilibrium level.

If the Economy Is Above Long-Run Equilibrium Output, What Will