Exhibit 20A-2 Macro AD/AS Models In Panel (b) of Exhibit 20A-2, 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 P₃. D) all of the above will take place.

Question

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The Answer of Exhibit 20A-2 Macro AD/AS Models In Panel (b) of Exhibit 20A-2, 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 P₃. D) all of the above will take place.

Exhibit 20A-2 Macro AD/AS Models in Panel (B) of Exhibit