Suppose the economy is self-regulating,the price level is 120,the quantity demanded of Real GDP and the quantity supplied of Real GDP in the short run both equal $5.7 trillion,and the quantity supplied of Real GDP in the long run is $5.2 trillion.Given all of this information,we can conclude that the economy ____________ in short run equilibrium,and that the price level in long run equilibrium will be _____________ than 120.
A) is not; less
B) is; greater
C) is; less
D) is not; greater

Question

Quizplus · Accepted Answer

The economy is in short-run equilibrium because the quantity demanded equals the quantity supplied at the current price level. However, since the long-run supply is less than the short-run supply, the price level will need to rise to reduce demand to match the long-run supply, making it greater than 120.

Suppose the Economy Is Self-Regulating,the Price Level Is 120,the Quantity