Consider an economy initially at long-run equilibrium with output (Y)equal to potential output (Y*).If the SRAS is positively sloped,then a shift to the right of the AD curve will lead to ___________ in the price level,in the short run.In the long run,the SRAS curve will shift to the ___________ and the equilibrium will be at __________.

Question

Quizplus · Accepted Answer

In the short run, a rightward shift of the AD curve increases the price level due to the positively sloped SRAS. In the long run, the SRAS shifts left as input prices adjust, returning output to potential (Y = Y*).

Consider an Economy Initially at Long-Run Equilibrium with Output (Y)equal