Exhibit 14A-2 Macro AD-AS Model In Exhibit 14A-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 14A-2  Macro AD-AS Model  In Exhibit 14A-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 where aggregate demand meets short-run aggregate supply. It does not necessarily indicate full employment or the need for policies to reduce unemployment, as those factors depend on the position of the long-run aggregate supply curve.

Exhibit 14A-2 Macro AD-AS Model in Exhibit 14A-2, the Intersection