Multiple Choice
Use the following to answer questions .
Exhibit: Short-run Aggregate Supply 
-(Exhibit: Short-run Aggregate Supply) Suppose that the economy is in long-run equilibrium at point A. Now suppose the stock market crashes, significantly reducing household wealth. What happens in the short-run?
A) Real GDP remains at Y1 but the price level falls to P3.
B) The quantity of real GDP demanded falls resulting in a movement from point A to point F.
C) Real GDP decreases to Y3 and the price level falls to P3.
D) The economy moves to a short-run equilibrium at point D.
Correct Answer:
Verified
Correct Answer:
Verified
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