When the aggregate demand curve and the short-run aggregate supply curve intersect,
A)the long-run aggregate supply curve must also intersect at the same point.
B)inflation must be increasing.
C)structural and frictional unemployment equal zero.
D)the economy is in short-run macroeconomic equilibrium.
E)the economy likely to experience higher than normal unemployment.

Question

Quizplus · Accepted Answer

When the aggregate demand (AD) curve and the short-run aggregate supply (SRAS) curve intersect, it represents a point where the quantity of real GDP supplied equals the quantity demanded in the short run. This indicates that the economy is in short-run macroeconomic equilibrium. The long-run aggregate supply curve (LRAS) may or may not intersect at the same point, depending on the state of the economy. Inflation and unemployment levels cannot be determined solely based on the intersection of AD and SRAS curves.

When the Aggregate Demand Curve and the Short-Run Aggregate Supply