Figure 27-1
-Refer to Figure 27-1.Suppose the economy is in short-run equilibrium above potential GDP and automatic stabilizers move the economy back to long-run equilibrium.Using the static AD-AS model in the figure above,this would be depicted as a movement from
A)D to C.
B)A to E.
C)C to B.
D)B to A.
E)E to A.

Question

Figure 27-1 
-Refer to Figure 27-1.Suppose the economy is in short-run equilibrium above potential GDP and automatic stabilizers move the economy back to long-run equilibrium.Using the static AD-AS model in the figure above,this would be depicted as a movement from
A)D to C. 
B)A to E. 
C)C to B. 
D)B to A. 
E)E to A.

Quizplus · Accepted Answer

The short-run equilibrium above potential GDP is at point C. Automatic stabilizers will move the economy back to long-run equilibrium, which is represented by point B in the figure. Therefore, there would be a movement from point C to point B.

Figure 27-1 -Refer to Figure 27-1.Suppose the Economy Is in Short-Run Equilibrium