Figure 10.3.2 Refer to Figure 10.3.2, which shows the  AS - AD  model...

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Figure 10.3.2

Refer to Figure 10.3.2, which shows the AS-AD model, in which an economy is in short-run macroeconomic equilibrium. Which of the following statements (1) and (2) is correct and which is incorrect?

(1)	The economy is at an above full-employment equilibrium.

(2)	As the economy adjusts to long-run equilibrium, the SAS curve will automatically shift rightward.

(1) is correct; (2) is incorrect.

0%

(2) is correct; (1) is incorrect.

0%

(1) and (2) are incorrect.

0%

(1) and (2) are correct.

100%

(1) is correct; (2) is correct only if the LAS curve shifts rightward at the same time.

0%

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