Exhibit 14A-1 Aggregate demand and supply model

Based on Exhibit 14A-1, when the aggregate demand curve shifts to the position AD₂ and the economy is operating at point E₂, the economy's position of long-run equilibrium corresponds to point:

Question

Exhibit 14A-1 Aggregate demand and supply model

Based on Exhibit 14A-1, when the aggregate demand curve shifts to the position AD₂ and the economy is operating at point E₂, the economy's position of long-run equilibrium corresponds to point:

Quizplus · Accepted Answer

When the aggregate demand curve shifts to ADS1U1B12S1U1B0, the economy moves from point E to point S1U1B0. However, this new equilibrium is not the long-run equilibrium because it is not on the long-run aggregate supply curve (LRAS). As the economy adjusts over time, the LRAS will shift to LRAS1, moving the intersection point from S1U1B0 to S1U1B1. Therefore, the long-run equilibrium corresponds to point ES1U1B13S1U1B0.

Exhibit 14A-1 Aggregate Demand and Supply Model