Figure 15-3
-Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.
A)A and B
B)A and C
C)C and D
D)B and D

Question

Figure 15-3 
-Refer to Figure 15-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.
A)A and B 
B)A and C 
C)C and D 
D)B and D

Quizplus · Accepted Answer

In the short run, the economy can be at a point where actual GDP is above or below potential GDP (Y1), such as points B and D. However, in the long run, the economy tends to return to potential GDP, making these points not long-run equilibria.

Figure 15-3 -Refer to Figure 15-3.Which of the Points in the Above