Figure 33-2.
-Refer to Figure 33-2.Point B represents
A) a short-run equilibrium and a long-run equilibrium.
B) a short-run equilibrium but not a long-run equilibrium.
C) a long-run equilibrium but not a short-run equilibrium.
D) neither a short-run equilibrium nor a long-run equilibrium.

Question

Figure 33-2. 
-Refer to Figure 33-2.Point B represents
A) a short-run equilibrium and a long-run equilibrium. 
B) a short-run equilibrium but not a long-run equilibrium. 
C) a long-run equilibrium but not a short-run equilibrium. 
D) neither a short-run equilibrium nor a long-run equilibrium.

Quizplus · Accepted Answer

Point B represents a short-run equilibrium because it is the intersection of the AD curve and the SRAS curve. However, it does not represent a long-run equilibrium because the economy is still producing above potential GDP, so there is pressure for prices to rise, causing the SRAS curve to shift leftward over time. The long-run equilibrium would be at a point where the AD curve intersects the LRAS curve at potential GDP.

Figure 33-2. -Refer to Figure 33-2.Point B Represents