12.2 Equilibrium in Aggregate Demand and Supply Analysis
AD - AS Equilibrium
-On the graph above,if output is falling,while the quantity demanded is rising,the economy may be at a point on ________.
A)the aggregate supply curve above the aggregate demand curve
B)the aggregate supply curve below the aggregate demand curve
C)the aggregate demand curve above the aggregate supply curve
D)the aggregate demand curve below the aggregate supply curve
E)none of the above

Question

12.2 Equilibrium in Aggregate Demand and Supply Analysis
AD - AS Equilibrium 
-On the graph above,if output is falling,while the quantity demanded is rising,the economy may be at a point on ________.
A)the aggregate supply curve above the aggregate demand curve 
B)the aggregate supply curve below the aggregate demand curve 
C)the aggregate demand curve above the aggregate supply curve 
D)the aggregate demand curve below the aggregate supply curve 
E)none of the above

Quizplus · Accepted Answer

If output is falling, while the quantity demanded is rising, the economy may be at a point on the aggregate supply curve above the aggregate demand curve. This is because the aggregate supply curve shows the relationship between the quantity of output supplied and the price level, while the aggregate demand curve shows the relationship between the quantity of output demanded and the price level. If the aggregate supply curve is above the aggregate demand curve, then the quantity of output supplied is greater than the quantity of output demanded, which means that output is falling.