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

Quizplus · Accepted Answer

An increase in government spending shifts the aggregate demand curve to the right, moving the economy from point A to point C in the long-run equilibrium, assuming the economy was initially at full employment.

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