Scenario 14-1
The economy is in long-run equilibrium. Suddenly, due to improved international relations, a boom experienced by a major trading partner, and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
-Refer to the Scenario 14-1. In the long-run, how does the change in price expectations created by optimism change the aggregate demand and aggregate supply diagram?
A) The long-run aggregate-supply curve shifts left.
B) The long-run aggregate-supply curve shifts right.
C) The short-run aggregate-supply curve shifts right.
D) The short-run aggregate-supply curve shifts left.

Question

Quizplus · Accepted Answer

The Answer of Scenario 14-1
The economy is in long-run equilibrium. Suddenly, due to improved international relations, a boom experienced by a major trading partner, and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
-Refer to the Scenario 14-1. In the long-run, how does the change in price expectations created by optimism change the aggregate demand and aggregate supply diagram?
A) The long-run aggregate-supply curve shifts left.
B) The long-run aggregate-supply curve shifts right.
C) The short-run aggregate-supply curve shifts right.
D) The short-run aggregate-supply curve shifts left.

Scenario 14-1 The Economy Is in Long-Run Equilibrium. Suddenly, Due to Improved