Exhibit 10A-2 Macro AD-AS Model

I n Exhibit 10A- 2, the intersection of AD with SRAS indicates:
A) a short-run equilibrium.
B) a long-run equilibrium.
C) that the economy needs policies to reduce unemployment.
D) that the economy is at full employment.

Question

​ Exhibit 10A-2 Macro AD-AS Model

​I n Exhibit 10A- 2, the intersection of AD with SRAS indicates:
A) ​a short-run equilibrium. 
B) ​a long-run equilibrium. 
C) ​that the economy needs policies to reduce unemployment. 
D) ​that the economy is at full employment.

Quizplus · Accepted Answer

The intersection of AD with SRAS indicates a short-run equilibrium, where the economy is producing at a level of output where aggregate demand meets short-run aggregate supply. It does not necessarily indicate full employment or the need for policies to reduce unemployment, as these depend on where the equilibrium level of output falls relative to potential output in the long run.

​ Exhibit 10A-2 Macro AD-AS Model

Exhibit 10A-2 Macro AD-AS Model