Refer to the information provided in Figure 11.8 below to answer the questions that follow. Figure 11.8
-Refer to Figure 11.8. If the economy is at Point A currently producing Y₀ and the Z factors decrease, the economy will move to Point ________ in the short run and to Point ________ in the long run.

Question

Refer to the information provided in Figure 11.8 below to answer the questions that follow.

Figure 11.8
-Refer to Figure 11.8. If the economy is at Point A currently producing Y₀ and the Z factors decrease, the economy will move to Point ________ in the short run and to Point ________ in the long run.

Quizplus · Accepted Answer

In the short run, a decrease in Z factors (such as a decrease in aggregate demand) will move the economy from Point A to Point B, where output is lower. In the long run, the economy will adjust to a new equilibrium at Point C, where output returns to its natural level.

Refer to the Information Provided in Figure 11