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Refer to the Diagram

Question 23

Multiple Choice

Refer to the diagram. Rational expectations theory says that a fully anticipated decrease in aggregate demand from AD<sub>2</sub> to AD<sub>1</sub> will A) move the economy from a to b to c. B) shift the AS curve to the left. C) move the economy from c to a new equilibrium at b. D) move the economy directly from c to a.
Refer to the diagram. Rational expectations theory says that a fully anticipated decrease in aggregate demand from AD2 to AD1 will


A) move the economy from a to b to c.
B) shift the AS curve to the left.
C) move the economy from c to a new equilibrium at b.
D) move the economy directly from c to a.

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