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The correct option that determines the
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Answer to Problem 24MCQ
Option d is correct.
Explanation of Solution
Explanation for the correct option:
d.
During economic growth real GDP is increased and AD, SRAS, and LRAS will shift towards the right as shown in the graph below:
Therefore, option d is correct.
Explanation for incorrect options:
a.
AD, LRAS, and SRAS will shift towards the right which represents the increase in real GDP or economic growth. Therefore, option a is an incorrect answer.
b.
The leftward shift represents the decrease in real GDP. Therefore, option b is incorrect.
d.
In the short-run fluctuations can be above or below the potential output level. It means changes take place in the short run too. Therefore, option d is incorrect.
e.
Aggregate demand will also increase which represents economic growth. Therefore, option e is incorrect.
Long-run
Chapter 7R Solutions
Krugman's Economics For The Ap® Course
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