Question: Use the graph below to answer the following questions. a. Which of the points A, B, C, or D can represent a long-run equilibrium? b.

Use the graph below to answer the following questions.
a. Which of the points A, B, C, or D can represent a long-run equilibrium?
b. Suppose that initially the economy is at point A. If aggregate demand increases from AD1 to AD2, which point represents short-run equilibrium? Which point represents the eventual long-run equilibrium? Briefly explain how the economy adjusts from the short-run equilibrium to the long-run equilibrium.

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a A and C represent longrun equilibrium points because they are on the LRAS curve b Point D re... View full answer

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