Figure 24-1

-In Figure 24.1 the shift of the aggregate supply curve from AS₁ to AS₂ and the following shift back to AS₁ is called ________.
A)a self-correcting mechanism
B)a self-fulfilling prophecy
C)a self-adjusting mechanism
D)a long-run correcting mechanism

Question

Figure 24-1 
 
-In Figure 24.1 the shift of the aggregate supply curve from AS₁ to AS₂ and the following shift back to AS₁ is called ________.
A)a self-correcting mechanism 
B)a self-fulfilling prophecy 
C)a self-adjusting mechanism 
D)a long-run correcting mechanism

Quizplus · Accepted Answer

The shift of the aggregate supply curve from AS₁ to AS₂ and then back to AS₁ is called a self-correcting mechanism. This is because the economy has a natural tendency to return to its long-run equilibrium, even after experiencing temporary shocks to aggregate demand or supply.

Figure 24-1 -In Figure 24.1 the Shift of the Aggregate Supply Curve