Exhibit 16A-3 Macro AD\AS Models In Panel (a)of Exhibit 16A-3, the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂. Classical theory argues that: A)SRAS will shift to leftward and establish full employment at P₃Y_p without government intervention. B)higher wages will result in a leftward shift of SRAS. C)long-run equilibrium will be established at Y_p and P₁. D)all of these will take place.

Question

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The Answer of Exhibit 16A-3 Macro AD\AS Models In Panel (a)of Exhibit 16A-3, the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂. Classical theory argues that: A)SRAS will shift to leftward and establish full employment at P₃Y_p without government intervention. B)higher wages will result in a leftward shift of SRAS. C)long-run equilibrium will be established at Y_p and P₁. D)all of these will take place.

Exhibit 16A-3 Macro AD\AS Models in Panel (A)of Exhibit