A short-run equilibrium occurs
A) at the intersection of the long-run aggregate supply curve and the aggregate demand curve.
B) at the intersection of the short-run aggregate supply curve and the long-run aggregate supply curve.
C) at the intersection of the short-run aggregate supply curve and the aggregate demand curve.
D) at the real GDP associated with full employment.

Question

Quizplus · Accepted Answer

Short-run equilibrium occurs at the intersection of the short-run aggregate supply and aggregate demand curves, where the quantity of real GDP produced is equal to the quantity demanded. It does not necessarily occur at the level of full employment, and it is not determined by the long-run aggregate supply curve alone.

A Short-Run Equilibrium Occurs