If the intersection of the short-run aggregate supply curve and the aggregate demand curve also intersect the long-run aggregate supply curve, then the economy is
A) at full employment.
B) operating at more than full employment.
C) in a recession.
D) operating at less than full employment.

Question

Quizplus · Accepted Answer

When the intersection point of the short-run aggregate supply curve and the aggregate demand curve also coincides with the long-run aggregate supply curve, it implies that the economy is at its potential level of output or full employment equilibrium. Hence, the correct answer is option A - at full employment.

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