Figure 15-3

-Refer to Figure 15-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?
A) A
B) B
C) C
D) D

Question

Figure 15-3
 
-Refer to Figure 15-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?
A) A 
B) B 
C) C 
D) D

Quizplus · Accepted Answer

If the economy is at point C and government spending decreases, aggregate demand will decrease, shifting the AD curve leftward. In the long run, the economy will move to a new equilibrium at point A, where the new AD curve intersects the long-run aggregate supply curve.

Figure 15-3 -Refer to Figure 15-3.Suppose the Economy Is at Point C.If