The figure below reflects the inverse relationship between real GDP and the price level.If the economy is initially at point c and aggregate demand is stable,in the long run,the economy will:

A)move toward point a
B)move toward point b
C)stay at point c
D)move toward point d
E)move toward point f

Question

The figure below reflects the inverse relationship between real GDP and the price level.If the economy is initially at point c and aggregate demand is stable,in the long run,the economy will:

A)move toward point a 
B)move toward point b 
C)stay at point c 
D)move toward point d 
E)move toward point f

Quizplus · Accepted Answer

The figure shows a long-run vertical supply curve, indicating that in the long run, changes in aggregate demand will only affect the price level and not real GDP. Therefore, if aggregate demand is stable, the economy will remain at point c in the long run.

The Figure Below Reflects the Inverse Relationship Between Real GDP