Refer to the graphs above. Assume that the economy is initially at equilibrium where AD₂ and AS intersect in Graph 1, and also assume that the economy is initially at point C in Graph 2. A movement from point C to point B in graph 2 would most likely be associated, in graph 1, with a shift of: A) AD to the right B) AD to the left C) AS to the right D) AS to the left

Question

Quizplus · Accepted Answer

A movement from point C to point B in Graph 2 indicates an increase in output level, which in turn would lead to an increase in aggregate demand in Graph 1. Therefore, the most likely shift would be a shift of AD to the right.

Refer to the Graphs Above