When the economy is in short-run equilibrium, there will be ________ output gap.
A)no
B)only a recessionary
C)either a recessionary or an expansionary
D)only an expansionary

Question

Quizplus · Accepted Answer

The economy is in short-run equilibrium at the output where the aggregate demand curve intersects the short-run aggregate supply line. If there is no output gap, then the economy is said to be in long-run equilibrium-not short-run equilibrium.

When the Economy Is in Short-Run Equilibrium, There Will Be