Figure 13-3
-Refer to Figure 13-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?
A)A
B)B
C)C

Question

Figure 13-3 
-Refer to Figure 13-3.Suppose the economy is at point C.If government spending decreases in the economy,where will the eventual long-run equilibrium be?
A)A 
B)B 
C)C

Quizplus · Accepted Answer

A decrease in government spending would lead to a decrease in aggregate demand. This would shift the aggregate demand curve to the left, moving the economy from point C to a new equilibrium point at a lower price level and output, which corresponds to point A in a typical aggregate demand and supply model.

Figure 13-3 -Refer to Figure 13-3.Suppose the Economy Is at Point C.If