For the following questions refer to Figure 14.3 below.
-Consider Figure 14.3 above.If the economy begins in its long-run equilibrium and there is an increase in the economy's risk premium,the economy would move from point __________ to __________.
A)c;d
B)a;d
C)b;c
D)b;a
E)d;a

Question

For the following questions refer to Figure 14.3 below. 
-Consider Figure 14.3 above.If the economy begins in its long-run equilibrium and there is an increase in the economy's risk premium,the economy would move from point __________ to __________.
A)c;d 
B)a;d 
C)b;c 
D)b;a 
E)d;a

Quizplus · Accepted Answer

The correct answer is A because an increase in the economy's risk premium would lead to a decrease in investment and a decrease in output, moving the economy from point c to point d.

For the Following Questions Refer to Figure 14