The reason that it is possible for the economy in the above figure to be at equilibrium point E2 rather than at equilibrium point E1 is that
A) in the long run there is always less than full employment.
B) in the short run the economy can produce more than it can in a long-run situation.
C) AD always shifts rightward and never shifts leftward.
D) the economy must be in a recession.
B
Economics
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If the government's budget deficit increases and the Ricardo-Barro effect does not apply
A) the real interest rate rises. B) investment increases. C) investment decreases. D) Both answers A and C are correct.
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As the interest rate rises, the present value of a given perpetual stream of income
A) increases. B) decreases. C) does not change. D) approaches infinity.
Economics