The economy is in short-run equilibrium when
A) aggregate demand intersects short-run aggregate supply.
B) short-run aggregate supply intersects long-run aggregate supply.
C) aggregate demand intersects long-run aggregate supply.
D) aggregate demand intersects both long-run and short-run aggregate supply.
E) the economy is at full-employment output.

Question

Quizplus · Accepted Answer

Short-run equilibrium occurs at the point where aggregate demand intersects short-run aggregate supply. At this point, the economy is producing at the level of output where the price level and real GDP intersect in the short run.

The Economy Is in Short-Run Equilibrium When