refer to the following aggregate demand-aggregate supply diagram

-If aggregate demand is given by AD₁,the economy will:

Question

refer to the following aggregate demand-aggregate supply diagram -If aggregate demand is given by AD₁,the economy will:

Quizplus · Accepted Answer

At the given aggregate demand of AD₁, the economy is producing output below the full-employment level of output. This is because the aggregate supply curve intersects the aggregate demand curve at a point where the output level is less than the full-employment level. Therefore, the economy will fall short of the full-employment level of output.

Refer to the Following Aggregate Demand-Aggregate Supply Diagram