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- Exam Code: L6M1
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NEW QUESTION: 1
If the intersection of aggregate demand and short-run aggregate supply is to the right of long-run aggregate supply, in the long run there will be a decrease in:
A. resource prices.
B. output prices.
C. output.
Answer: C
Explanation:
The economy is experiencing a temporary economic boom but cannot last since the intersection is to the right of long-run aggregate supply. Output and resource prices will rise, but with sufficient time for the adjustment of all prices output will fall back to the level of long-run aggregate supply due to higher resource prices.
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