Figure 10-3
-Starting from long-run equilibrium at point A in Figure 10-3, at which of the following points would short-run equilibrium occur immediately following an unanticipated increase in stock prices?
A)A
B)B
C)C

Question

Figure 10-3 
-Starting from long-run equilibrium at point A in Figure 10-3, at which of the following points would short-run equilibrium occur immediately following an unanticipated increase in stock prices?
A)A 
B)B 
C)C

Quizplus · Accepted Answer

An unanticipated increase in stock prices would lead to an increase in wealth and thus an increase in consumption. This would shift the aggregate demand curve to the right, leading to a new short-run equilibrium at point B.

Figure 10-3 -Starting from Long-Run Equilibrium at Point a in Figure 10-3