Those who prefer a passive approach to the conduct of macroeconomic policy tend to believe that markets are self-correcting

Suppose the economy is in a long-run equilibrium when a positive demand shock occurs. On the graphs above, show what happens to bring the economy back to long-run equilibrium, assuming that there is no policy response

In words, describe how the graph would be different, if policy makers did intervene.

We can safely say that total output can decrease if there is a(n)

A. decrease in the number of workers per machine. B. increase in the size of the labor force and an increase in the productivity of workers. C. increase in the size of capital and an increase in the productivity of machines. D. increase in the number of machines per worker.