Figure 1

-Refer to the Figure above.Suppose the economy is operating in a recession such as point B.If policymakers wished to move output to its long run natural rate, they should attempt to shift
A)aggregate demand to the left.
B)short run aggregate supply to the left.
C)aggregate demand to the right.
D)short run aggregate supply to the right.

Question

Figure 1
 
-Refer to the Figure above.Suppose the economy is operating in a recession such as point B.If policymakers wished to move output to its long run natural rate, they should attempt to shift
A)aggregate demand to the left. 
B)short run aggregate supply to the left. 
C)aggregate demand to the right. 
D)short run aggregate supply to the right.

Quizplus · Accepted Answer

To move output to its long run natural rate, policymakers should attempt to shift aggregate demand to the right. This will increase both output and prices in the short run, but in the long run, prices will return to their original level while output remains at the natural rate. Shifting short run aggregate supply to the right would increase output and decrease prices in both the short and long run, which is not the desired outcome.

Figure 1 -Refer to the Figure Above.Suppose the Economy Is Operating in Economy