When there is an intersection of an economy's aggregate demand and aggregate supply curves:
A) there may be either a surplus or shortage of labour on the labour market.
B) an equilibrium price level is established in the economy.
C) an equilibrium level of real GNP is established.
D) all of the above are correct.

Question

Quizplus · Accepted Answer

When the aggregate demand and aggregate supply curves intersect, it indicates an equilibrium state in the economy where the price level stabilizes (B), the real Gross National Product (GNP) finds its equilibrium level (C), and depending on various factors, there could be a surplus or shortage of labor in the labor market (A).

When There Is an Intersection of an Economy's Aggregate Demand