The Great Depression showed that the short-run aggregate supply and the aggregate demand curves:
A) must always intersect at full employment.
B) can intersect at output levels below full employment.
C) must intersect at output levels above full employment.
D) can never lead to deflation.

Question

Quizplus · Accepted Answer

The Great Depression demonstrated that the economy can operate below full employment, where aggregate demand and short-run aggregate supply intersect at a lower output level, leading to high unemployment and underutilized resources.

The Great Depression Showed That the Short-Run Aggregate Supply and the Aggregate