If an economy is in a recession, it means that:
A) the economy is not in long-run equilibrium.
B) total output is less than potential output.
C) the short-run equilibrium lies to the left of the long-run aggregate supply curve.
D) All of these are true.

Question

Quizplus · Accepted Answer

In a recession, the economy is not in long-run equilibrium (A), total output is less than potential output (B), and the short-run equilibrium lies to the left of the long-run aggregate supply curve (C). Therefore, all of these statements are true.

If an Economy Is in a Recession, It Means That