Exhibit 16-5
-The economy pictured in Exhibit 16-5 is

Question

Exhibit 16-5 
-The economy pictured in Exhibit 16-5 is

Quizplus · Accepted Answer

The graph shows a short-run equilibrium at point E, where aggregate demand and aggregate supply intersect at a price level of P and an output level of Y. The economy is not in a long-run equilibrium because the aggregate supply curve is below the potential GDP line, indicating that there is still unused capacity in the economy. However, this does not necessarily mean that government intervention is required to reach long-run equilibrium.

Exhibit 16-5 -The Economy Pictured in Exhibit 16-5 Is