Figure 9-3

-Refer to Figure 9-3.This graph depicts a shift of aggregate demand from AD₀ to AD₁.Which of the following has NOT occurred in this situation?
A)The real gross domestic product has decreased.
B)The economy represented here is in recession.
C)The new, short-run equilibrium is at point E0.
D)The price level has decreased.

Question

Figure 9-3
 
-Refer to Figure 9-3.This graph depicts a shift of aggregate demand from AD₀ to AD₁.Which of the following has NOT occurred in this situation?
A)The real gross domestic product has decreased. 
B)The economy represented here is in recession. 
C)The new, short-run equilibrium is at point E0. 
D)The price level has decreased.

Quizplus · Accepted Answer

The new short-run equilibrium is at point E1, not E0. The shift of aggregate demand from AD₀ to AD₁ has caused a decrease in the price level, but it is not stated whether the real gross domestic product has decreased or whether the economy is in a recession.

Figure 9-3 -Refer to Figure 9-3.This Graph Depicts a Shift of Aggregate