Which statement is TRUE with respect to short-run and long-run aggregate supply?
A) The economy can be on both curves simultaneously.
B) If the economy is on the short-run aggregate supply curve, it cannot also be on the long-run aggregate supply curve.
C) If the economy is on the long-run aggregate supply curve, it cannot also be on the short-run aggregate supply curve.
D) The economy can never rest on both curves simultaneously.

Question

Quizplus · Accepted Answer

The economy can be on both the short-run and long-run aggregate supply curves simultaneously. In the short run, the economy can operate at any point on the short-run aggregate supply curve, which is upward-sloping. In the long run, the economy reaches its potential output level and operates at a point on the vertical long-run aggregate supply curve. Therefore, the economy can be on both curves simultaneously if it is operating at its potential output level in the long run, but experiencing short-run fluctuations due to changing economic conditions.

Which Statement Is TRUE with Respect to Short-Run and Long-Run