This economy is in what situation at point B?

Group of answer choices

Stagflation.

Recession.

Full employment.

Expansion.

What is the expected price level at B?

Group of answer choices

P_C

P_A

P_C

None of the other answers are correct.

If the current, short run situation at B was caused by an increase in government spending, then what was the original, long-run equilibrium?

Group of answer choices

C

B is short run and long run outcome.

None of the other answers are correct.

A

What else could have caused the economy to wind up in short run equilibrium at point B that did not involve a shift in AD?

Group of answer choices

An increase in income taxes.

A cut in income taxes.

A decline in oil and gas prices.

An increase in oil and gas prices.

If policymakers use monetary or fiscal policy to return the economy to long run equilibrium, what will occur?

Group of answer choices

AD shifts left and the economy moves to point C.

SRAS shifts down, and the economy moves to point A.

SRAS shifts up and the economy moves to point A.

AD shifts out the economy moves to point A.

If instead policy makers do not act and the economy returns to long run equilibrium without a policy intervention, then what will occur?

Group of answer choices

AD shifts right and the economy moves to a new equilibrium not shown on the graph.

SRAS shifts down and the economy moves to point C.

AD shifts left and the economy moves to point C.

SRAS shifts up and the economy moves to point A.

LRAS P SRAS PA B PB Pc AD Y YF Y Ise the diagram above to answer questions