Consider the nature of macroeconomic equilibrium.If,at a particular price level,the total output demanded is greater than that supplied by producers,then
A)the price level will decline toward its equilibrium value.
B)the price level will rise toward its equilibrium value.
C)the aggregate demand curve will shift to the left,re-establishing an equilibrium.
D)the aggregate supply curve will shift to the right,re-establishing an equilibrium.
E)the aggregate supply curve will shift to the left,re-establishing equilibrium.

Question

Quizplus · Accepted Answer

If there is excess demand for goods and services, producers will raise prices to capture some of that demand. As prices rise, consumers will reduce their quantity demanded, which will in turn lead to a reduction in total output demanded. As a result, the economy will move along the aggregate demand curve toward the macroeconomic equilibrium, where output supplied equals output demanded. This process will continue until the price level rises to its equilibrium level where the quantity supplied is equal to the quantity demanded.

Consider the Nature of Macroeconomic Equilibrium