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Figure 92 0 gear... new, new Refer to Figure 9-2. Explain the process whereby this economy could 'selfcorrect' from equilibrium E]. O Eventually input prices
Figure 92 0 gear... new, new Refer to Figure 9-2. Explain the process whereby this economy could 'selfcorrect' from equilibrium E]. O Eventually input prices will decrease, causing the AD curve to shift rightward, moving the economy back towards potential output. O Eventually input prices will increase, causing cost of production to also increase. This increase in costs of production will shift the SRAS curve leftward, moving the economy back towards potential output. O Eventually input prices will decrease, causing cost of production to also increase. This increase in costs of production will shift the SRAS curve rightward, moving the economy back towards potential output. O Eventually input prices will increase, causing the AD curve to shift leftward, moving the economy back towards potential output
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