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 long-run, all other things unchanged?
A) The aggregate demand curve will shift back to AD1.
B) The economy will be stuck at an output level below its potential level.
C) The economy returns to full-employment equilibrium at point A.
D) The economy returns to full-employment equilibrium at point D.
Correct Answer:
Verified
Correct Answer:
Verified
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