Figure 14.1
-Suppose the economy is at point C in Figure 14.1.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

Question

Figure 14.1 
-Suppose the economy is at point C in Figure 14.1.If government spending decreases in the economy,where will the eventual long-run equilibrium be?

Quizplus · Accepted Answer

In the long run, a decrease in government spending will shift the aggregate demand curve to the left, leading to a new equilibrium at a lower output level, which is represented by Point A.

Figure 14.1 -Suppose the Economy Is at Point C in Figure 14.1.If