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Suppose we are currently at point A in the diagram below. Firms become more optimistic and aggregate demand shifts from AD 1 to AD 2
Suppose we are currently at point A in the diagram below. Firms become more optimistic and aggregate demand shifts from AD1to AD2as shown in the graph. Assume there is no growth and the government remains idle. What can we expect the Long-Run Macroeconomic equilibrium to be?
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A point with lower price level and lower real GDP.
A point with higher price level and the same level of real GDP.
A point with the same price level and higher real GDP.
A point with higher price level and higher real GDP.
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