Refer to the information provided in Figure 11.8 below to answer the questions that follow. Figure 11.8 -Refer to Figure 11.8. This economy cannot continue to produce Y₁ (or at point B. because A) the price of raw material and wages will increase shifting the aggregate supply curve to AS₁. B) the price of inputs will decrease, shifting the aggregate supply curve to AS₂. C) the price of raw material will increase, shifting the aggregate demand curve to AD₂. D) all of the above

Question

Quizplus · Accepted Answer

At point B, the economy is producing at its maximum capacity, which means that the demand for inputs (raw materials and wages) will increase. This increase in demand for inputs will result in an increase in their prices, leading to a shift in the aggregate supply curve to the left (AS₁). Consequently, the economy cannot continue to produce at point B.

Refer to the Information Provided in Figure 11