-The reason that it is possible for the economy in the above figure to be at equilibrium point E₂ rather than at equilibrium point E₁ is that A) in the long run there is always less than full employment. B) in the short run the economy can produce more than it can in a long-run situation. C) AD always shifts rightward and never shifts leftward. D) the economy must be in a recession.

Question

Quizplus · Accepted Answer

In the short run, an economy can indeed produce more than its long-run sustainable output due to factors like overtime work, utilization of idle capacity, and short-term increases in labor and capital inputs. This can temporarily push the economy beyond its long-run equilibrium, explaining why it might be at a higher output level in the short run.

-The Reason That It Is Possible for the Economy in the Above