Refer to Figure 10.1 for the following questions.
Figure 10.1

-Suppose the economy is at point A in Figure 10.1. If consumer spending increases in the economy, where will the eventual long-run equilibrium be?
A)A
B)B
C)C

Question

Refer to Figure 10.1 for the following questions.
Figure 10.1
 
-Suppose the economy is at point A in Figure 10.1. If consumer spending increases in the economy, where will the eventual long-run equilibrium be?
A)A 
B)B 
C)C

Quizplus · Accepted Answer

An increase in consumer spending boosts aggregate demand, shifting the demand curve to the right. In the long run, this leads to a new equilibrium at a higher price level and output, corresponding to point C in a typical aggregate demand and supply model.

Refer to Figure 10.1 for the Following Questions