For the following questions, use the diagram below:
Figure 34-3

-Refer to Figure 34-3.Which of the following is correct?
A)A wave of optimism could move the economy from a to B
B)If aggregate demand moves from AD₁ to AD₂ the economy will stay at b in both the short and long run.
C)It is possible that either fiscal or monetary policy might have caused the shift from AD₁ to AD₂.
D)All of the above are correct.

Question

For the following questions, use the diagram below:
Figure 34-3
 
-Refer to Figure 34-3.Which of the following is correct?
A)A wave of optimism could move the economy from a to B 
B)If aggregate demand moves from AD₁ to AD₂ the economy will stay at b in both the short and long run. 
C)It is possible that either fiscal or monetary policy might have caused the shift from AD₁ to AD₂. 
D)All of the above are correct.

Quizplus · Accepted Answer

The diagram shows the aggregate demand and supply model. A shift from AD₁ to AD₂ could be caused by either fiscal or monetary policy, which could potentially move the economy from point a to b. However, it cannot be assumed that the economy will stay at point b in both the short and long run.

For the Following Questions, Use the Diagram Below