As shown in Exhibit 14A-1,the economy's point of short-run equilibrium,given by the shift of the aggregate demand curve from AD₁ to AD₂ ,is:
A) E₁.
B) E₂.
C) E₃.
D) unable to be determined.

Question

Quizplus · Accepted Answer

The short-run equilibrium point after the shift of the aggregate demand curve from AD₁ to AD₂ is E₂, where the new aggregate demand curve intersects with the short-run aggregate supply curve. This is the point where the quantity of output demanded equals the quantity of output supplied in the short run.

As Shown in Exhibit 14A-1,the Economy's Point of Short-Run Equilibrium,given