Beginning from long-run equilibrium at point E₁ in Exhibit 14A-1,the aggregate demand curve shifts to AD₂ .The real GDP and price level (CPI)in short-run equilibrium will be:
A) $12 billion and 200.
B) $8 billion and 250.
C) $8 billion and 150.
D) $12 billion and 250.

Question

Quizplus · Accepted Answer

In the short run, the aggregate demand curve shifts to AD2, the real GDP will increase to $12 billion, and the price level (CPI) will increase to 200.

Beginning from Long-Run Equilibrium at Point E₁ in Exhibit 14A-1,the