Based on the given figure, the economy is initially in long-run equilibrium at point A. If there is a favorable supply shock that increases potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then the new long-run equilibrium is reached at point:

A. E.
B. C.
C. B.
D. D.


Answer: A

Economics

You might also like to view...

Insurance companies are not permitted to require AIDS tests as a precondition for coverage, so they do not know whether or not the people they insure have already contracted HIV (the virus that causes AIDS). This situation is an example of

a. signaling. b. adverse selection. c. the principal-agent problem. d. moral hazard.

Economics

In the market for foreign-currency exchange, the source of the supply of dollars is _________. The supply curve is _________ because _____________

Fill in the blank(s) with correct word

Economics

For developed countries, more price supports and subsidies are provided to agriculture worldwide than to any other sector of the economy.

Answer the following statement true (T) or false (F)

Economics

Referring to the diagram, which of the following statements is INCORRECT? 

A. If the individual firm raises its price, it will capture all sales in the market. B. The equilibrium market price is $5, at which the industry demand and supply curves intersect. C. The individual firm takes as given the market price along the perfectly elastic demand curve "d." D. The individual firm faces the going market price as determined by the industry.

Economics