The economy is initially in long-run equilibrium. Concerns over future housing affordability cause young people to...

The economy is initially in long-run equilibrium. Concerns over future housing affordability cause young people to reduce consumption and save more. In the short run:

the aggregate demand curve shifts left and the short-run aggregate supply curve shifts left.

the aggregate demand curve shifts right and the short-run aggregate supply curve shifts left.

the aggregate demand curve shifts left and the short-run aggregate supply curve does not shift.

the aggregate demand curve shifts right and the short-run aggregate supply curve does not shift.

the aggregate demand curve shifts left and the short-run aggregate supply curve shifts right.

Solutions

Expert Solution

Answer is option C)

Since Consumption falls & Saving fall

So AD shifts to left, option B & D are right .

& SRAS curve doesn't shift

So option C)

Rahul Sunny answered 1 year ago

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