Figure 33-2
-Refer to Figure 33-2. If the economy is in long-run equilibrium, a favorable shift in short-run aggregate supply curve would move the economy from
A)S to T.
B)T to U.
C)U to V.
D)V to S.

Question

Figure 33-2  ​
-Refer to Figure 33-2. If the economy is in long-run equilibrium, a favorable shift in short-run aggregate supply curve would move the economy from
A)S to T. 
B)T to U. 
C)U to V. 
D)V to S.

Quizplus · Accepted Answer

In long-run equilibrium, the economy is at full employment. A favorable shift in the short-run aggregate supply curve, such as a decrease in input prices or an increase in productivity, would lead to a movement from a point like S to T, where output increases and prices decrease.

Figure 33-2 ​

Figure 33-2