f the short-run IS-LM equilibrium occurs at a level of income below the natural level of output, then in the long run the price level will , shifting the curve to the right and returning output to the natural level. a. increase; IS b. decrease; IS c. increase; LM d. decrease; LM

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05-07-2022
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f the short-run IS-LM equilibrium occurs at a level of income below the natural level of output, then in the long run the price level will , shifting the curve to the right and returning output to the natural level. a. increase; IS b. decrease; IS c. increase; LM d. decrease; LM

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Bharathparasad577idn Bharathparasad577idn · Answer 1 · 2022-07-13T09:23:52-04:00

Decrease; LM

When the total amount of output required and supplied equals one another, an economy is in short-run equilibrium. When total output and total demand are equal, this is referred to as short-run equilibrium.
As usual, the LM curve is produced for a set price level P1. The point K where the IS curve crosses the LM curve represents the short-run equilibrium of the economy. Take note that the economy's income is lower than its natural level in this short-run equilibrium.
Economic equilibrium in economics refers to a scenario where supply and demand are balanced and the values of economic variables do not change in the absence of external factors.

Thus this is the answer.

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