Graphically the intersection of the aggregate demand curve, the short-run and long-run aggregate supply curves determines:
A)the recessionary gap.
B)short-run equilibrium.
C)the expansionary gap.
D)long-run equilibrium.

Question

Quizplus · Accepted Answer

Long-run equilibrium is a situation in which actual output equals potential output and the inflation rate is stable. Graphically, long-run equilibrium occurs when the AD curve, the SRAS line, and the LRAS line all intersect at a single point.

Graphically the Intersection of the Aggregate Demand Curve, the Short-Run