Refer to the above diagram. Assume the economy is operating at point Z. If wechoose to leave the economy to correct itself, which automatic mechanismwould bring us back to long run equilibrium?O A decrease in aggregate demandO An increase in short run aggregate supplyO A decrease in long run aggregate supplyO A decrease in short run aggregate supplyO An increase in aggregate demand AD2AD,LRASAD.WP.SRASP3P2P,P.QoQ,Q, Q,Real Domestic Output, GDPRefer to the above diagram. Assume the economy is operating at point Z. If wechoose to leave the economy to correct itself, which automatic mechanismwould bring us back to long run equilibrium?

With economy operating at below potential output(LRAS) at point Z, if the economy will left for self…

Refer to the above diagram. Assume the economy is operating at point Z. If we choose to leave the economy to correct itself, which automatic mechanism would bring us back to long run equilibrium? A decrease in aggregate demand O An increase in short run aggregate supply O A decrease in long run aggregate supply

Refer to the above diagram. Assume the economy is operating at point Z. If we choose to leave the economy to correct itself, which automatic mechanism would bring us back to long run equilibrium? A decrease in aggregate demand O An increase in short run aggregate supply O A decrease in long run aggregate supply

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Classical Macroeconomics And The Self Regulating Economy

Section: Chapter Questions

Problem 6QP

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