Exhibit 15-4

-Refer to the graph in the exhibit.Suppose the economy is initially at point c, and aggregate demand increases.What point would the economy move toward in the long run, assuming a passive policy?

Question

Exhibit 15-4
 
-Refer to the graph in the exhibit.Suppose the economy is initially at point c, and aggregate demand increases.What point would the economy move toward in the long run, assuming a passive policy?

Quizplus · Accepted Answer

In the long run, with a passive policy, the economy will move back to its natural level of output, which is represented by point a.

Exhibit 15-4 -Refer to the Graph in the Exhibit.Suppose the Economy Is