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Refer to the Graph Above

Question 52

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Refer to the graph above. Assume that the economy is in initial equilibrium where AD<sub>1</sub> intersects AS<sub>1</sub>. If there is a decrease in aggregate demand to AD<sub>2</sub>, then according to mainstream economists, if prices are flexible and wages are not, this will result in an equilibrium at point: A) B B) C C) D D) E Refer to the graph above. Assume that the economy is in initial equilibrium where AD1 intersects AS1. If there is a decrease in aggregate demand to AD2, then according to mainstream economists, if prices are flexible and wages are not, this will result in an equilibrium at point:


A) B
B) C
C) D
D) E

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