Suppose firms become very optimistic about future business conditions and invest heavily in new capital equipment. Show the short-run effect of this optimism on the aggregate-demand curve. Price Level LRAS Quantity of Output AS₂ AS, AD₂ AD₁ Aggregate Demand Aggregate Supply LRAS ? Which of the following reasons could explain why the aggregate quantity of output supplied changes? Check all that apply. Prices are sticky. People have misperceptions about the price level. The price level has risen. Wages are not sticky.

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