Figure 24-3
-Refer to Figure 24-3. Suppose the economy is at point C. If investment spending decreases in the economy, where will the eventual long-run equilibrium be?
A) A
B) B
C) C
D) D

Question

Figure 24-3 
-Refer to Figure 24-3. Suppose the economy is at point C. If investment spending decreases in the economy, where will the eventual long-run equilibrium be?
A) A 
B) B 
C) C 
D) D

Quizplus · Accepted Answer

If investment spending decreases, aggregate demand will decrease, shifting the AD curve to the left. In the long run, the economy will move to a new equilibrium at a lower output level, typically represented by point A in such diagrams, assuming point A is to the left of point C.

Figure 24-3 -Refer to Figure 24-3. Suppose the Economy Is at Point