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Refer to the Graph Above

Question 111

Multiple Choice

Refer to the graph above. Assume that the economy is in initial equilibrium where AD<sub>1</sub> intersects AS<sub>1</sub>. If there is an anticipated decrease in aggregate demand to AD<sub>2</sub>, then according to rational expectations theory, the path for adjustment runs from point: A) A to B to C B) A to D to C C) A directly to C D) A directly to D Refer to the graph above. Assume that the economy is in initial equilibrium where AD1 intersects AS1. If there is an anticipated decrease in aggregate demand to AD2, then according to rational expectations theory, the path for adjustment runs from point:


A) A to B to C
B) A to D to C
C) A directly to C
D) A directly to D

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