Refer to the information provided in Figure 13.7 below to answer the questions that follow. Figure 13.7
-Refer to Figure 13.7. If the economy is at Point B, the cost of raw material decreased dramatically, and the aggregate demand did not change, the economy could move to Point

Question

Refer to the information provided in Figure 13.7 below to answer the questions that follow.  Figure 13.7
-Refer to Figure 13.7. If the economy is at Point B, the cost of raw material decreased dramatically, and the aggregate demand did not change, the economy could move to Point

Quizplus · Accepted Answer

If the cost of raw materials decreases dramatically, it would lead to a decrease in the cost of production for companies. This would increase the aggregate supply (AS) without changing the aggregate demand (AD), moving the economy from a point of higher price level and lower output (Point B) to a point of lower price level and higher output (Point E), assuming the AD curve remains unchanged.

Refer to the Information Provided in Figure 13