DSE 18-28

The diagram below shows the aggregate demand (AD) curves, short run aggregate supply (SRAS) curves and the long run aggregate supply (LRAS) curve of an economy. The economy initially operates at E₀.

If the government gives $10 000 cash to every citizen every year, the short-run equilibrium will be at __________ and the long-run equilibrium will be at __________.

A. E₂ …… E₀

B. E₂ …… E₁

C. E₃ …… E₀

D. E₃ …… E₄