Suppose an economy experiences an expansion caused by a shift in aggregate demand to the right. This economy transition back to its long-run equilibrium as the expected price level Group of answer choices falls, shifting aggregate supply right. falls, shifting aggregate demand right. rises, shifting aggregate demand left. rises, shifting aggregate supply left. None of the options is correct.

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Business

Ashton Walter

23 December, 19:21

Suppose an economy experiences an expansion caused by a shift in aggregate demand to the right. This economy transition back to its long-run equilibrium as the expected price level Group of answer choices falls, shifting aggregate supply right. falls, shifting aggregate demand right. rises, shifting aggregate demand left. rises, shifting aggregate supply left. None of the options is correct.

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Answers (1)

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German Drake · Answer 1

Answer: - The price level falls when the shifting of aggregate demand towards rights take place during economic transition back to its long-run equilibrium.

Explanation:

The price level will always fall when the demand for certain products increases per unit of consumption towards each sale of quantity in the market. It can also affect the global market. For example when the price of petrol or diesel is reduced drastically, then the aggregate demand for the petrol or diesel will increase and its curve is shifted to the right. This can continue in the long-run period equilibrium.

Secondly, It is also predicted by all the economists that factors of increase in money supply, gradually developing economic status, monetary policies of all the central banks in all the countries can mainly influence the shifting status of aggregate demand curve towards right.