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Question 7

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Use the following to answer questions :
Exhibit: Shift in Aggregate Demand Use the following to answer questions : Exhibit: Shift in Aggregate Demand -(Exhibit: Shift in Aggregate Demand) In this graph, initially the economy is at point E, with the price P<sub>0</sub> and output Y. Aggregate demand is given by curve AD<sub>0</sub>, and SRAS and LRAS represent, respectively, short-run and long-run aggregate supply. Now assume that the aggregate demand curve shifts so that it is represented by AD<sub>2</sub>. The economy moves first to point ______ and then, in the long run, to point ______. A) A; D B) D; A C) A; B D) B; A
-(Exhibit: Shift in Aggregate Demand) In this graph, initially the economy is at point E, with the price P0 and output Y. Aggregate demand is given by curve AD0, and SRAS and LRAS represent, respectively, short-run and long-run aggregate supply. Now assume that the aggregate demand curve shifts so that it is represented by AD2. The economy moves first to point ______ and then, in the long run, to point ______.


A) A; D
B) D; A
C) A; B
D) B; A

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