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Question 52

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Use the following to answer questions .
Exhibit: Short-run Aggregate Supply 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. As a result, A) the economy's potential output decreases to Y<sub>3</sub>. B) unemployment is below its natural rate. C) the economy moves to a new long-run equilibrium at point C. D) there is some cyclical unemployment.
-(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. As a result,


A) the economy's potential output decreases to Y3.
B) unemployment is below its natural rate.
C) the economy moves to a new long-run equilibrium at point C.
D) there is some cyclical unemployment.

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