Exhibit 14A-4 Macro AD-AS Model In Exhibit 14A-4, point P₂, Y₁ represents: A) that the economy needs policies to reduce unemployment. B) a long-run equilibrium. C) a short-run equilibrium. D) that the economy is at full employment.

Question

Quizplus · Accepted Answer

Point P₂ represents a short-run equilibrium where aggregate demand (AD) intersects with short-run aggregate supply (SRAS). It does not necessarily indicate full employment or the need for policies to reduce unemployment.

Exhibit 14A-4 Macro AD-AS Model in Exhibit 14A-4, Point P2

Exhibit 14A-4 Macro AD-AS Model in Exhibit 14A-4, Point P₂