A short- run macroeconomic equilibrium occurs
A) when the rate at which prices of goods and services increase equals the rate at which money wage rates increase.
B) at the intersection of the short- run aggregate supply curve and the aggregate demand curve.
C) at the intersection of the short- run aggregate supply curve and the long- run aggregate supply curve.
D) at the intersection of the short- run aggregate supply curve, the long- run aggregate supply curve, and the aggregate demand curve.

Question

Quizplus · Accepted Answer

Short-run macroeconomic equilibrium occurs at the intersection of the short-run aggregate supply curve and the aggregate demand curve. This is where the quantity of output supplied is equal to the quantity of output demanded, and the price level is determined. Option A is incorrect because it refers to the concept of the Phillips curve, which is a short-run relationship between inflation and unemployment, not macroeconomic equilibrium. Option C is incorrect because it refers to the long-run aggregate supply curve, which is not relevant to short-run equilibrium. Option D is incorrect because it refers to the concept of full-employment equilibrium, which is only possible in the long run.

A Short- Run Macroeconomic Equilibrium Occurs