-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,at which point is the economy most likely to end up in the short run?
A) A
B) B
C) C
D) D

Question

-Refer to Exhibit 8-1.Assume that the economy is originally in equilibrium at point A.If businesses become more optimistic about future sales,at which point is the economy most likely to end up in the short run?
A) A 
B) B 
C) C 
D) D

Quizplus · Accepted Answer

If businesses become more optimistic about future sales, they will increase production, which will shift the aggregate supply curve to the right. This will lead to a new equilibrium at point B, where output and employment are higher and the price level is lower.