Starting from long-run equilibrium, what will be the impact of a decrease in aggregate dema It will shift the LRAS curve to the right. It will result in a higher price level. It will decrease unemployment. It will cause a recessionary gap.
Starting from long-run equilibrium, what will be the impact of a decrease in aggregate dema It will shift the LRAS curve to the right. It will result in a higher price level. It will decrease unemployment. It will cause a recessionary gap.
Chapter14: Aggregate Demand And Supply
Section14.A: The Self Correcting Aggregate Demand And Supply Model
Problem 19SQ
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Transcribed Image Text:Starting from long-run equilibrium, what will be the impact of a decrease in aggregate demand?
It will shift the LRAS curve to the right.
It will result in a higher price level.
It will decrease unemployment.
It will cause a recessionary gap.
Transcribed Image Text:What needs to occur such that short-run equilibrium is also the long-run equilibrium?
Companies profits must be maximized.
b. Consumption has to equal investments.
The level of real GDP must be at the potential output.
The price level must be stable.
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