In the above figure, if initial equilibrium is at point A and if there is an unanticipated increase in aggregate demand from AD1 to AD2, then
A. in the short run real output will remain at Y1.
B. in the long run real output will increase above Y1.
C. in the short run real output will increase above Y1, but in the long run it will return to Y1.
D. real output will increase above Y1 in both the short run and in the long run.
Answer: C
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A. small increases B. large increases C. small decreases D. no change
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A. raises equilibrium quantity and price for organic foods. B. lowers equilibrium quantity and raises equilibrium price for organic foods. C. raises equilibrium quantity and lowers equilibrium price for organic foods. D. lowers equilibrium quantity and price for organic foods.