Exhibit 15-2
-In Exhibit 15-2,short-run equilibrium occurs
A) at point a
B) at point b
C) at point c,where the actual price level exceeds the expected price level
D) at point c,where the actual price level is less than the expected price level
E) at point c,where there is a contractionary gap

Question

Exhibit 15-2 
-In Exhibit 15-2,short-run equilibrium occurs
A) at point a 
B) at point b 
C) at point c,where the actual price level exceeds the expected price level 
D) at point c,where the actual price level is less than the expected price level 
E) at point c,where there is a contractionary gap

Quizplus · Accepted Answer

Short-run equilibrium occurs at the intersection of AD and SRAS, which is point c in the graph. At this point, the actual price level exceeds the expected price level, indicating that firms are producing output at a level higher than they anticipated. This implies that there is upward pressure on prices, which will eventually lead to an increase in the expected price level and a shift of SRAS to the left.

Exhibit 15-2 -In Exhibit 15-2,short-Run Equilibrium Occurs