-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

Quizplus · Accepted Answer

In the short run, the economy can operate beyond its long-run capacity due to factors like increased demand or temporary boosts in productivity, allowing it to produce more than its long-run potential.

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