The figure below shows equilibrium in an aggregate demand-aggregate supply model. Which of the following will be true of an economy in the long run that is at point M in the short run?

A) The actual price level will be lower than the expected price level.
B) The actual output will fall short of the potential output.
C) The short-run aggregate supply curve will remain stable at SRAS100.
D) The short-run aggregate supply curve will shift to SRAS109.
E) Real GDP will be equal to nominal GDP.

Question

The figure below shows equilibrium in an aggregate demand-aggregate supply model. Which of the following will be true of an economy in the long run that is at point M in the short run?

A) The actual price level will be lower than the expected price level. 
B) The actual output will fall short of the potential output. 
C) The short-run aggregate supply curve will remain stable at SRAS100. 
D) The short-run aggregate supply curve will shift to SRAS109. 
E) Real GDP will be equal to nominal GDP.

Quizplus · Accepted Answer

The Answer of The figure below shows equilibrium in an aggregate demand-aggregate supply model. Which of the following will be true of an economy in the long run that is at point M in the short run?

A) The actual price level will be lower than the expected price level. 
B) The actual output will fall short of the potential output. 
C) The short-run aggregate supply curve will remain stable at SRAS100. 
D) The short-run aggregate supply curve will shift to SRAS109. 
E) Real GDP will be equal to nominal GDP.

The Figure Below Shows Equilibrium in an Aggregate Demand-Aggregate Supply