According to the short-run aggregate supply curve,if output minus potential output equals zero,then ________.
A)unemployment might be zero
B)inflation might be stable
C)expected inflation must be stable
D)price shocks must be zero
E)none of the above

Question

Quizplus · Accepted Answer

In the short-run aggregate supply curve, if output equals potential output, it implies that the economy is at full employment, and inflation is likely stable as there are no pressures from output gaps.

According to the Short-Run Aggregate Supply Curve,if Output Minus Potential