Question
(41) The economy is in long-run equilibrium. Suddenly, due to improved international relations, a boom experienced by a major trading partner, and the increased confidence
(41) The economy is in long-run equilibrium. Suddenly, due to improved international relations, a boom experienced by a major trading partner, and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
Refer to the Scenario 14-1. In the long-run, how does the change in price expectations created by optimism change the aggregate demand and aggregate supply diagram?
The long-run aggregate-supply curve shifts left.
The long-run aggregate-supply curve shifts right.
The short-run aggregate-supply curve shifts right.
The short-run aggregate-supply curve shifts left.
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