Exhibit 10.8

-Refer to Exhibit 10.8, which shows the long-run equilibrium in an aggregate demand-aggregate supply model. Which of these could have caused the movement shown in this exhibit?
A) a decrease in the size of the labor force
B) an increase in the price level
C) an increase in net investment
D) an increase in autonomous consumption
E) a decrease in autonomous consumption

Question

Exhibit 10.8
 
-Refer to Exhibit 10.8, which shows the long-run equilibrium in an aggregate demand-aggregate supply model. Which of these could have caused the movement shown in this exhibit?
A) a decrease in the size of the labor force 
B) an increase in the price level 
C) an increase in net investment 
D) an increase in autonomous consumption 
E) a decrease in autonomous consumption

Quizplus · Accepted Answer

An increase in net investment can shift the aggregate demand curve to the right, leading to a new long-run equilibrium with a higher level of output.

Exhibit 10.8 -Refer to Exhibit 10.8, Which Shows the Long-Run Equilibrium in the Long-Run