Figure 33-8

-In Figure 33-8, which of the following movements illustrates the response of the economy to an increase in aggregate demand when expectations are "rational"?
A)C to A
B)C to B
C)C to D
D)C to E

Question

Figure 33-8
​ 
-In Figure 33-8, which of the following movements illustrates the response of the economy to an increase in aggregate demand when expectations are "rational"?
A)C to A 
B)C to B 
C)C to D 
D)C to E

Quizplus · Accepted Answer

When expectations are rational, the economy moves directly from the initial equilibrium to the new long-run equilibrium, which is represented by the movement from C to B.

Figure 33-8 ​

Figure 33-8