-The reason that it is possible for the economy in the above figure to be at E₂ rather than at 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 full-adjustment situation.
C)AD always shifts outward and never shifts inward.
D)the economy must be in a recession.

Question

-The reason that it is possible for the economy in the above figure to be at E₂ rather than at 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 full-adjustment situation. 
C)AD always shifts outward and never shifts inward. 
D)the economy must be in a recession.

Quizplus · Accepted Answer

In the short run, the economy can operate beyond its long-run potential output due to factors like increased demand or temporary resource utilization, allowing it to be at E₂ instead of E₁.

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