At the intersection of the short-run aggregate supply curve and the aggregate demand curve, the economy is in:
A)a short-run equilibrium but not necessarily a long-run equilibrium.
B)a long-run equilibrium but not necessarily a short-run equilibrium.
C)both a short-run and a long-run equilibrium.
D)neither a short-run nor a long-run equilibrium.

Question

Quizplus · Accepted Answer

The intersection of the short-run aggregate supply curve and the aggregate demand curve indicates a short-run equilibrium, where the quantity of goods and services supplied equals the quantity demanded. However, this does not guarantee that the economy is in a long-run equilibrium, which requires additional conditions such as full employment and price level stability.

At the Intersection of the Short-Run Aggregate Supply Curve and the Aggregate