Exhibit 17-3 Aggregate demand and aggregate supply curves As shown in Exhibit 17-3, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD₁ to AD₂ will cause the economy to move: A)from E₁ to E₂ initially and then eventually move back to E₁. B)directly from E₁ to E₂ and then remain at E₂. C)directly from E₁ to E₃ and then remain at E₃. D)from E₁ to E₂ initially and then eventually move to E₃.

Question

Quizplus · Accepted Answer

The Answer of Exhibit 17-3 Aggregate demand and aggregate supply curves As shown in Exhibit 17-3, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD₁ to AD₂ will cause the economy to move: A)from E₁ to E₂ initially and then eventually move back to E₁. B)directly from E₁ to E₂ and then remain at E₂. C)directly from E₁ to E₃ and then remain at E₃. D)from E₁ to E₂ initially and then eventually move to E₃.

Exhibit 17-3 Aggregate Demand and Aggregate Supply Curves as Shown