The Figure Below Shows Short-Run Equilibrium in an Aggregate Demand-Aggregate

Multiple Choice

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model. If the economy is currently producing Y₁ level of output, long-run equilibrium will be established if:

A) the short-run aggregate supply curve shifts to the right to remove the expansionary gap.
B) the short-run aggregate supply curve shifts to the left to remove the expansionary gap.
C) the short-run aggregate supply curve shifts to the left to remove the recessionary gap.
D) the short-run aggregate supply curve shifts to the right to remove the recessionary gap.
E) there is a leftward shift of the aggregate demand curve.