Question

The graph shows Keynes's theory of aggregate demand. A line graph shows total economic output on the x axis and price on the y axis. A line labeled Demand starts high on the y axis but decreases as it moves along the x axis. A line labeled supply (short run) starts out low on the y axis but increases as it moves along the x axis. A line labeled supply (long run) stays vertical in the middle of the x axis. What is likely to happen if a new aggregate demand curve moves to the right? Prices and output would drop, and the equilibrium point will stay the same. Prices would rise, and output would drop in the short run. Prices and output would rise, and the equilibrium point will change. Prices would rise, and output would drop in the long run.

Answer 1

Answer:

C: Prices and output would rise, and the equilibrium will change

Explanation: