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

Question

Quizplus · Accepted Answer

When the short-run aggregate supply curve, the aggregate demand curve, and the long-run aggregate supply curve all intersect at a single point, the economy is considered to be in both a short-run and long-run equilibrium. This indicates that the economy is at its full employment level of output without any inflationary or deflationary gaps.

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